Latest news with #AmEx
Yahoo
21-05-2025
- Business
- Yahoo
American Express Company (AXP): A Bull Case Theory
We came across a bullish thesis on American Express Company (AXP) on Substack by Max Dividends and Serhio MaxDividends. In this article, we will summarize the bulls' thesis on AXP. American Express Company (AXP)'s share was trading at $296.17 as of May 20th. AXP's trailing and forward P/E were 20.68 and 19.57 respectively according to Yahoo Finance. Pixabay/Public Domain In a volatile 2025 market environment, American Express (AXP) has emerged as a premier dividend growth stock, blending its 175-year legacy with a future-focused strategy that appeals to both institutional investors and long-term shareholders. Distinguished by its integrated business model and premium customer base, AmEx ranks fourth globally in transaction volume behind UnionPay, Visa, and Mastercard but stands apart with its focus on high-margin, recurring revenue streams rather than riskier lending. This approach has earned the endorsement of Warren Buffett's Berkshire Hathaway, which holds a 21% stake, and supports the company's reputation for operational resilience and consistent capital returns. While its dividend yield currently stands at 1.1%, AmEx has delivered a 120% cumulative dividend increase over the past decade and raised its payout by 17% in 2025. Complementing this shareholder-friendly policy is an aggressive buyback program that has reduced shares outstanding by 30% since 2015, further enhancing per-share value. In 2024, AmEx reported $60.5 billion in revenue and $9.1 billion in net income, with a return on equity surpassing 30%, and its 2025 outlook calls for 8%–10% revenue growth and EPS between $15.00 and $15.50. A key growth driver is the expanding influence of Millennials and Gen Z, who now represent 42% of its customer base and 75% of new premium card acquisitions, fueling spending in travel and dining—areas up 18% year-over-year. AmEx continues to adapt through merchant expansion, digital innovation, and flexible payment tools like 'Plan It,' helping to fend off fintech and BNPL competition. With strong institutional backing and bullish analyst sentiment, AmEx offers both dependable income and long-term upside potential. Also, check out what we found about Visa (V). American Express Company (AXP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held AXP at the end of the fourth quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of AXP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AXP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-05-2025
- Business
- Yahoo
AmEx is Holding Strong: But is That Enough for Investors Right Now?
American Express Company AXP continues to showcase the strength of its premium brand in a volatile macroeconomic environment. Backed by a high-spending, affluent customer base and consistent earnings performance, the company has held up better than many of its peers. As one of Berkshire Hathaway's longest-standing holdings, AmEx is often regarded as a quality name. However, it's not immune to global headwinds. From tariff-related uncertainties to evolving credit risk dynamics and shifting consumer behaviors, near-term upside potential could be limited, even with a strong foundation in place. AmEx shares have gained 24.1% over the past year, outperforming the S&P 500's 11.2% growth and the broader industry's 10% growth. Meanwhile, larger peers like Visa Inc. V and Mastercard Incorporated MA have done even better, gaining 29.5% and 26.9%, respectively. Image Source: Zacks Investment Research At first glance, AmEx appears attractively priced. It currently trades at a forward price-to-earnings (P/E) ratio of 18.76X, slightly below the industry average of 18.94X. However, that figure sits above its five-year median of 16.79X, suggesting the stock is relatively expensive by its own historical standards. It has a Value Score of C. By comparison, Visa and Mastercard command significantly higher multiples, with forward P/E ratios of 29.62X and 34.33X, respectively, reflecting their more scalable, lower-risk business models. Image Source: Zacks Investment Research While American Express is often lumped in with traditional credit card companies, its structure is unique. Unlike Visa and Mastercard, which operate only as networks, AmEx is both a card issuer and a bank. This means it earns revenue not only from transaction fees but also from interest on outstanding balances. This structure offers advantages, especially in rising interest rate environments. While higher rates can curb spending, they also boost AmEx's interest income. Its first-quarter interest income of $6.1 billion increased 6% year over year. Also, its network volumes rose 5% year over year to $439.6 billion, fueled by strong U.S. consumer spending. AmEx also maintains a healthy balance sheet. As of the end of the first quarter, the company held $52.5 billion in cash and cash equivalents and just $1.6 billion in short-term debt. In 2024, it returned $7.9 billion to shareholders via dividends and share repurchases. It continued that trend in early 2025, returning $1.3 billion in the first quarter alone. In March, the quarterly dividend was raised by 17% to 82 cents per share. AmEx's strong fundamentals are reinforced by a loyal customer base, high card acquisition rates and strong retention. The stock is trading above both its 50-day and 200-day moving averages: technical signals that indicate sustained upward momentum. The Zacks Consensus Estimate for 2025 EPS is $15.18, indicating 13.7% growth, with 2026 expected to grow another 14%. Revenue projections show year-over-year growth of 8.1% in 2025 and 8% in 2026. (See the Zacks Earnings Calendar to stay ahead of market-making news.) The company also has a strong history of beating expectations, having exceeded EPS estimates in each of the last four quarters with an average surprise of 5.2%. American Express Company price-eps-surprise | American Express Company Quote Despite its strengths, AmEx isn't without risk. The company has heavier exposure to travel and entertainment spending, a segment that can experience sharp downturns during economic slowdowns. Recent growth has been driven by increased spending from Millennials and Gen Z in these categories, making it more vulnerable to shifts in discretionary spending. However, its affluent customer base is likely to be less susceptible to such scenarios. While American Express shows long-term promise, there are near-term headwinds worth considering. Rising expenses are a concern. AmEx's total costs have steadily increased: up 22% in 2021, 24% in 2022, 10% in 2023, 6% in 2024, and another 10% in the first quarter of 2025. While part of this stems from strong customer engagement and card usage, it still puts pressure on margin growth. Moreover, American Express remains more domestically focused than Visa and Mastercard, both of which have significantly expanded their global digital payments ecosystems. AmEx's reliance on lending and card volume growth may limit its flexibility in adapting to emerging non-card payment trends. And unlike its network-only peers, AmEx assumes credit risk from its cardholders. This dual role, issuer and processor, means it must manage both operational efficiency and portfolio quality, particularly as economic uncertainty rises. American Express remains a fundamentally strong company with a premium brand, loyal customer base, and a unique dual-role model that generates diverse revenue streams. Its strong balance sheet, consistent shareholder returns, and solid earnings trajectory make it a compelling long-term story. However, rising costs, credit risk exposure, and macro uncertainties, especially in travel and discretionary spending, limit the stock's near-term upside potential. Given its current valuation and risks, AmEx has a Zacks Rank #3 (Hold) at present. For existing investors, staying the course makes sense. For new entrants, a wait-and-see approach might offer a more attractive entry point down the road. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA) : Free Stock Analysis Report Visa Inc. (V) : Free Stock Analysis Report American Express Company (AXP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
29-04-2025
- Business
- Globe and Mail
2 Warren Buffett-Backed Dividend Stocks to Buy Now Amid the Market Selloff
In a volatile market in which investors seek both growth and stability, dividend stocks stand out as safe-haven investments. Warren Buffett, also known as the 'Oracle of Omaha,' and his company Berkshire Hathaway (BRK.B), are well-known for investing in high-quality businesses with long-term competitive advantages, strong management, and predictable cash flows. Many of these companies also happen to be reliable dividend payers. If you want consistent growth, dividend income, and peace of mind, consider these two Buffett-backed dividend stocks. Warren Buffett Stock #1: American Express American Express (AXP), also known as AmEx, is one of the world's most recognized financial services brands. AmEx is well-known for its credit and charge cards, particularly those aimed at affluent individuals and businesses, as well as for travel services. The company holds a 14.6% weight in Berkshire Hathaway's portfolio, reflecting Warren Buffett's confidence in the company's long-term prospects. AmEx pays a dividend that yields 1.24%. While yield is an important factor in evaluating dividend stocks, a company's payout ratio is critical for determining dividend safety. American Express has a low payout ratio of around 19%, which means it retains a significant portion of its earnings to reinvest in growth while still rewarding shareholders. Valued at $187 billion, AmEx stock has fallen 10.8% year-to-date, compared to the S&P 500 Index's ($SPX) fall of 6.1%. In the most recent first quarter, diluted earnings rose 9% to $3.64 per share, with a 7% increase in revenue net of interest expense. Unlike many credit card companies, American Express focuses on high-income, creditworthy customers who are less vulnerable to economic downturns. This affluent customer base also allows the company to charge annual fees and promote high-margin products, which boost profitability and dividend payouts. It paid out $600 million in dividends and repurchased shares worth $700 million in Q1. In March, the company raised its quarterly dividend by 17%, to $0.82 per share. That demonstrates management's confidence in the company and its ability to generate long-term cash flow. AmEx reported $52.5 billion in cash and cash equivalents at the end of the first quarter. The company's debt-to-equity ratio is high, at 1.64x. However, AXP's interest coverage ratio of 6.04x reveals that its earnings easily address debt interest payments. Amex continues to benefit from the resurgence of global travel and customer experiences. It provides exposure to long-term trends in digital payments, travel rebound, and global card adoption, all of which are expected to increase in the coming years. The company provides a unique combination of dividend reliability, long-term growth potential, and economic resilience. While its yield may not stand out, its strong dividend growth track record, solid balance sheet, and premium customer base make it an excellent addition to any dividend investor's portfolio. Analysts covering AmEx expect revenue to rise by 8% in 2025, followed by earnings growth of 14.2%. Despite its strengths, AXP is currently trading at 17.1x forward earnings, which is reasonable given its historical averages and earnings growth potential. For long-term investors, this is an opportunity to secure a quality dividend payer at a reasonable price. Overall, analysts consider American Express stock a ' Moderate Buy.' Out of the 29 analysts that cover the stock, nine rate it a 'Strong Buy,' two recommend a 'Moderate Buy,' 17 suggest a "Hold,' and one rates it a 'Strong Sell.' The Street's average target price is $298.42, which is 13% higher than current levels. Warren Buffett Stock #2: Kraft Heinz With a market cap of $35.4 billion, the Kraft Heinz Company (KHC) is one of the largest food and beverage companies in the world. It owns several iconic brands, including Heinz ketchup, Kraft Mac & Cheese, Oscar Mayer, Velveeta, Smart Ones, and Philadelphia cream cheese, among others. Its products are sold all over the world, making it a major player in the global food industry. Kraft Heinz pays an attractive dividend yield of 5.4%. Its stable payout ratio of about 57.6% indicates that the company's earnings can support dividend payments while leaving room for dividend growth. KHC stock has fallen 4% year-to-date, compared to the broader market dip. In the fourth quarter, while revenue dipped 3.1%, adjusted earnings increased by 7.7%. For 2024, revenue fell by 2.1%, while adjusted earnings rose by 2.7%. Despite recent revenue headwinds, Kraft Heinz continues to streamline its portfolio, focus on international market growth, and expand its product lineup to meet changing consumer tastes while maintaining dividend payouts. In 2024, it generated $3.2 billion in free cash flow, paid $1.9 billion in dividends, and repurchased $988 million of its shares. Management expects organic net sales to be flat or down 2.5% in 2025 compared to fiscal 2024. Adjusted earnings could fall by 10% to 14% this year. Free cash flow generation could be comparable to 2024. Kraft Heinz represents around 3.5% of Berkshire Hathaway's portfolio. Buffett's investment philosophy emphasizes strong fundamentals and consistent performance, aligning with Kraft Heinz's profile. Analysts expect Kraft Heinz's revenue and earnings to fall by 3% and 12%, respectively, in 2025. However, earnings are expected to rise by 3.8% in 2026. KHC, trading at 10 times forward 2026 earnings, is a reasonable dividend stock to buy right now. On Wall Street, Kraft Heinz stock is rated a ' Hold ' overall. Out of the 20 analysts who cover KHC stock, one rates it a 'Strong Buy,' 15 rate it a "Hold,' one says it's a 'Moderate Sell,' and one rates it a 'Strong Sell.' The stock is hovering around its average price target of $30.10. However, its high target price of $35 implies upside potential of 17% over the next 12 months.
Forbes
23-04-2025
- Entertainment
- Forbes
Everybody's Going Country At Stagecoach, Including Am Ex
Everybody, from Post Malone to Beyonce, is exploring country music these days. And brands are taking notice. After over a decade at Coachella American Express is making its first foray into Stagecoach this weekend. I spoke with Bess Spaeth, EVP, Global Brand Management & Experiences at Am Ex, who explained this weekend's activation and the increasing appeal of country music for their members and music fans in general. Steve Baltin: I just got off an hour call with Alana Springsteen and Crystal Gayle for a Stagecoach preview. I got the two of them together for a call. It's so interesting to listen, because they approach it as its own world. Bess Spaeth: It is, and I think they've done so much to make the programming, to me, unbelievably interesting. Baltin: Tell me about how you approach this weekend, because you have a longtime connection with Coachella, but this is such a different demo. And it's a wide demo. Yesterday I happened to be talking to Sammy Hagar separately. How do you approach a festival that gets Sammy Hagar, that gets Nelly, that gets Zach Bryan? Spaeth: Yeah, we've been a longtime partner at Coachella. We've actually been partners with AEG for over two decades. And when we started to see what was happening at Stagecoach, exactly what you're talking about is really interesting, because we always start with our members first and try to understand what the broader cultural trends are. So, what we've seen in terms of the increasing demand for country music, crossovers from everyone from Beyoncé to Post Malone, we look at that and then we see the breadth of who is attending. You can see where the appeal comes from. Baltin: As you say, at this point, everybody wants to do country music. Spaeth: Yeah, I won't claim to know where that trend came from or what the inspirations for the artists are. I'll leave that to them. But it is an interesting trend that we saw. And certainly we do see Stagecoach as a place to take advantage of that trend and really meet our card members where they are in terms of the types of music that they want to listen to. Baltin: You say you won't say where that trend came from, but talking with both of them, as we were talking about, you go back to the Seventies, and you look at artists like the Eagles or Neil Young that would have been accepted as country back then. But music was much more segregated and divided by genre. Do you now see in the broader country audience that wide range of people who listen to a lot of different stuff? Spaeth: Yeah, I agree and I think the whole space has evolved to allow for more flexibility and not putting people just into their exclusive boxes. Baltin: So, are you seeing that too with your members? Spaeth: I think that it has gotten so large that the appeal is, I'm not going to say quite universal, so broad that it starts to make sense for brands like American Express. Our members are a wide array of folks and so reaching them in places that have such broad appeal makes absolute sense. Baltin: Having been with Coachella for years, you know the brand, you know the partnership. But I think what makes it fun is it's like when Beyonce does Cowboy Carter, that's a whole different world than Lemonade. Spaeth: Yeah, absolutely. You're right, obviously, we have a wonderful partnership that we already talked about with AEG, with Goldenvoice. We've had a wonderful run of activations at Coachella. But then you approach Stagecoach, and some things are similar, and some things are really different about it. And so how do we learn what those things are and make sure that how we show up there still meets the needs of our members, whether it's Coachella or Stagecoach? We try to understand and gain some insight into what people want, as we thought about the trends that we see. Some of them transcend music genre, right, and are more a general fandom trend. And certainly, what we've seen is the rise in spending on festival merch. So, as an example, that's a place we've really leaned into. People's seemingly insatiable hunger for festival merch is something we can help them with. We've got special card member laying at the merch tent or at our own activation merch window with specialized merch, making sure we're filling the needs that our members have in that moment. Baltin: You mentioned merch, when you're approaching merch for the US Open in New York sports merch and festival merch aren't necessarily that different. People still want stuff they take home stuff that reminds them of the experience. Spaeth: One hundred percent. That is actually a thematic for us across many spaces and I would say beyond even just sort of the one-off tentpole events like a festival or a US Open. Over the years we've done a number of individual artists partnerships, oftentimes exclusive access, early access to merch is a part of those partnerships. As we think about both sports and music, we have a number of partnerships with venues around the globe, and oftentimes, a percentage off offer at concessions is part of that. So, we do think about how do we meet that somewhat insatiable need in a lot of different ways. But there's other things as well in terms of our on-site presence. Yes, it's got a merch component. But in past years, particularly in our long history of Coachella, we've had more of like a traditional lounge historically. But in the last few years, we've evolved that to create more of like an interactive experience with different interactive activities that people can do. We kind of guide them through the experience rather than just a place to stand around and get a drink. You can still stand around and get a drink if you want, but having more activities for people to do. So, we're bringing that back for both Coachella and Stagecoach this year. And then just thinking about how we bring some of our other partners in the ecosystem together in interesting ways. Gen Z is a huge audience at these festivals. Gen Z is a huge audience for AMEX. How do we serve them? So, lots of Gen Zers on Pinterest. So, we're partnering together with Pinterest at Coachella. We've got a collage experience that people can do in our space. I think those kinds of partnerships are interesting. Back in the merch space, we have another partnership that we're doing specific to Stagecoach with a luggage brand called BEIS.. We're working with them actually offsite at one of our hotel collection properties at the JW Marriott. So, teaming up with them and we're introducing a limited edition AmEx and BEIS belt bag that we'll be surprising and delighting some of our members with at the JW.
Yahoo
17-04-2025
- Business
- Yahoo
AmEx profit beats expectations as card spending holds up
By Arasu Kannagi Basil and Niket Nishant (Reuters) - American Express beat Wall Street estimates for first-quarter profit on Thursday, as its affluent customers shrugged off fears of a slowdown to continue spending on travel and entertainment. The credit card giant also stuck to its profit and revenue forecast for 2025, at a time when several businesses have withdrawn guidance citing the uncertainty surrounding the new U.S. administration's trade policies. AmEx sees revenue growing at an 8% to 10% range in 2025, while profit is expected to be between $15 and $15.50 per share. The company, however, noted the forecast was "subject to the macroeconomic environment". Though such caveats are standard, it was explicitly included this time because of "less visibility" into the economic trajectory, CFO Christophe Le Caillec told Reuters. AmEx's longstanding focus on affluent customers has often insulated it from broader economic weakness. For years, it has used rewards and exclusive perks as a strategy to attract high-spending customers. "A lot of the buyside was worried that this (forecast) would need to come down amidst softening consumer spend and travel," analysts at Truist Securities wrote in a note. Profit rose 6% to $2.58 billion, or $3.64 per share, for the three months ended March 31. Analysts had expected it to earn $3.46 apiece, according to estimates compiled by LSEG. Restaurant and lodging spending remained strong in the quarter although airline billings growth slowed relative to 2024 trends. Spending trends through the first week and a half of April have remained consistent with the first quarter, Le Caillec told analysts. Revenue rose 8% to $16.97 billion in the quarter, slightly above expectations. Provisions for credit losses fell to $1.2 billion from $1.3 billion a year earlier. AmEx also saw a "very modest" increase in spending by small business owners and wholesale merchants, who were building their inventory by pre-purchasing goods that could get expensive because of the tariffs, the CFO said. Shares fell marginally in early trading. They have dropped 8% since the tariffs were announced on April 2, which Trump has touted as "Liberation Day". AmEx shares trade at 16.6 times 2025 earnings per share estimate, a discounted multiple compared with the S&P 500 index, analysts at William Blair wrote in a note. "We believe this discount is unwarranted, as American Express has posted faster revenue and earnings growth than the market," they said.
