American Express (AXP) Posts Strong Quarter as Millennial & Gen Z Drive Spending

Stock (Symbol)

American Express (AXP)

Stock Price

$314

Sector

Data is as of

Expected to Report

Company Description

American Express Company is a globally integrated payments company.

The Company provides its customers with access to products, insights, and experiences that builds business.

It operates under four segments:

U.S. Consumer Services (USCS), Commercial Services (CS), International Card Services (ICS), and Global Merchant and Network Services (GMNS).

USCS offers travel and lifestyle services as well as banking and non-card financing products.

CS offers payment and expense management, banking and non-card financing products. CS also issues corporate cards and provides services to select global corporate clients.

ICS also provides services to international customers, including travel and lifestyle services, and manages certain international joint ventures and its loyalty coalition businesses.

GMNS provides multi-channel marketing programs and capabilities, services and data analytics. It provides credit and charge cards to consumers, small businesses, mid-sized companies and corporations.

Sharek’s Take

American Express is a globally integrated payments company in providing credit and charge cards to individuals and businesses with high credit scores. The company is both a card issuer (like Chase and Citi are) and a card network (like MasterCard and Visa). American Express’ integrated payments platform has direct relationships with Merchants and Card Members, creating a closed loop so the company has direct access to information. American Express can analyze information on spending to underwrite risk, reduce fraud and do targeted marketing. What makes American Express special is its Membership Rewards program, which include benefits such as airport lounge access, dining experiences, and other travel benefits. The company has been attracting younger, Millennial and Gen Z customers. Amex’s Platinum Card has evolved into a premium lifestyle card with a wide range of benefits that appeal cross generations.

Here’s a short history of American Express:

• 1850 – American Express was founded as an express mail, freight forwarding business in Buffalo, NY.
• 1891 – The company introduced the Travelers Cheque to help adventurous and entrepreneurial customers traveling abroad feel more secure with their money.
• 1895 – It opened its Paris office, its first outside North America.
• 1958 – American Express introduced its first charge card in the U.S and Canada.
• 1991 – It launched Membership Rewards, the world’s largest card-based rewards program.
• 1992 – American Express spun off credit card processor First Data, which has since merged with Fiserv (FI).
• 2021 – It introduced its first business checking account product and new digital capabilities.

AXP engages in businesses comprising four operating segments:

• US Consumer Services (USCS):
  • This segment primarily issues proprietary consumer cards to US consumers and provides travel and lifestyle services.
• Commercial Services (CS):
  • This segment primarily issues proprietary cards and services to corporate and small businesses in the US and select global corporate clients. The services include payment and expense management and non-card financing solutions.
• International Card Services (ICS):
  • This segment primarily issues proprietary cards and travel and lifestyle services outside the US.
• Global Merchant Network Services (GMNS):
  • This segment operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics.

American Express is a reasonably safe stock that is part of the Dow Jones Industrial Average. Amex does have some credit risk, as the company holds credit card loans, unlike Visa and MasterCard. There have been years during the past decade when profits haven’t hit All-Time highs. Thus, this stock doesn’t have the great certainty that MasterCard and Visa possess. In 2025, AXP returned $7.6 billion of capital to its shareholders, including $2.3 billion of dividends and $5.3 billion of share repurchases.  I used to consider this a ten percent grower (Est. LTG + yield) long term, but now management aspirations are mid-teens profit growth. AXP is part of the Conservative Portfolio. With a P/E of 18, this stock has room to move higher.

One Year Chart

AXP stock has been solid. The shares just digested some gains during a recent market correction. THis looks like a good time to buy.

The P/E of 18 is in green, signifying the stock is good value. My fair value is P/E of 23.

Analysts have an Est. LTG of 15% on this stock, same with last quarter.

Quarterly profit growth was a solid 18% last quarter and is expected to ease to 8%. But AXP beat the street by 29 cents last qtr, and if it beats by the same amount this qtr that could be 29% growth.

Earnings Table

• Total Billed Business grew 10% YoY. Goods & Services grew 8%, while Travel & Entertainment rose 9%.
• U.S. Consumer Services Billed Business increased 10% YoY. Gen Z rose 38% and accounted for 6% of the total US Consumer. Millennials grew 13% and made up 30% of the total. Gen X increased 8% and accounted for 36% of the total. Baby Boomers + grew 4% and represented 28% of the total.
• Commercial Services Billed Business increased 4% YoY. US SME increased 4% and accounted for 81% of the total, while US Large & Global Corp. increased 4% and represented 19% of the total.
• International Card Services Billed Business increased 20% YoY. International Consumer increased 13% and accounted for 65% of the total. Meanwhile, International SME & Large Corp rose 12% and represented 35% of the total.
• Transaction growth was up 10% YoY. Management continued to see good momentum in spend trends.
• The company acquired 3.1 million new cards during the quarter. Global consumer new accounts acquired from Millennial and Gen Z increased 66% YoY, while global new accounts acquired on fee-paying products rose 73% YoY.

Segment revenue growth was:

• Discount Revenue: +9% YoY
• Net Card Fees: +18% YoY
• Service Fees: +13% YoY
• Net Interest Revenue: +13% YoY

Annual Profit Estimates increased this quarter. For 2026, management expect revenue growth to be 9-10% YoY.

Quartely Profit Estimates for the next 4 quarters are 8%, 13%, 24%, and 9% growth. Analysts estimate AXP’s revenue will grow 10% next quarter.

Fair Value

This quarter, the stock is $314, giving it a P/E of 18.

My Fair Value is a P/E of 23, and that equates to $405 a share, 29% higher than the recent quote.

Based on 2027 estimates, the stock has an upside of 47%, which would be ample returns for a conservative stock.

Bottom Line

American Express (AXP) has had an erratic profit history. Also, the stock hasn’t been a steady grower the past decade. But notice below the chart that profit growth has been solid the past four years.

American Express is a nice card to have with perks younger consumers like. With the US economy humming along, this company should continue to do well. And the recent dip gives new investors a buying opportunity.

AXP moves from 8th to 7th in the Conservative Growth Portfolio Power Rankings.

Power Rankings

N/A

Aggressive Growth Portfolio

N/A

Conservative Growth Portfolio

7 of 19