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Yahoo
41 minutes ago
- Business
- Yahoo
American Express Company: A Bull Case Theory
We came across a bullish thesis on American Express Company on Chit Chat Stocks Newsletter's Substack by Brett Schafer. In this article, we will summarize the bulls' thesis on AXP. American Express Company's share was trading at $298.59 as of June 20th. AXP's trailing and forward P/E ratios were 20.85 and 19.76, respectively, according to Yahoo Finance. A close-up of a hand holding a credit card, representing the companies multi-level payment services. American Express remains a high-quality business with strong long-term potential, but the author is holding out for a broader market panic to buy at more attractive valuations. Q1 2025 results reaffirmed the company's strength: shares outstanding declined 3% YoY, the dividend was raised by 17%, and billed business grew 7% excluding Leap Day, driven by 14% growth from Gen Z and Millennials and 13% internationally. Stable write-off rates and 3.4 million new card acquisitions signal robust customer engagement. American Express continues to strengthen its network effects—more cards lead to greater merchant value—and is gaining ground internationally, especially among younger consumers. With $4.4 billion spent on rewards last quarter, earnings still rose, thanks to the company's vertically integrated model. Unlike Visa or Mastercard, AmEx owns the network and the customer relationship, amplifying its competitive edge as it scales. 2025 EPS guidance starts at $15, implying a forward P/E of 17.7—solid, though not yet a bargain. The author sees the potential for 10%+ annual EPS growth driven by GDP-plus revenue expansion, inflation tailwinds, and share buybacks. A key catalyst this year is the expected Platinum Card revamp, which may see the annual fee rise to $1,000 and help sustain 20% card fee revenue growth. While current performance is impressive, the author prefers to wait for market-driven price weakness, particularly from consumer stress events, to accumulate shares around 10x normalized earnings. Given its durable growth and competitive moat, AmEx remains a 'never sell' candidate—if bought at the right price. Previously, we covered a bullish thesis on American Express Company by Daan Rijnberk in April 2025, which highlighted its vertically integrated model, premium customer base, and strong international growth. The company's stock price has appreciated by approximately 17% since our coverage. This is because the thesis played out. Brett Schafer shares a similar view but emphasizes buying during broader market dislocations. American Express Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held AXP at the end of the first quarter, which was 71 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 have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.
Yahoo
14-06-2025
- Business
- Yahoo
Why American Express (AXP) Dipped More Than Broader Market Today
American Express (AXP) closed at $287.79 in the latest trading session, marking a -3.42% move from the prior day. The stock trailed the S&P 500, which registered a daily loss of 1.13%. Meanwhile, the Dow experienced a drop of 1.79%, and the technology-dominated Nasdaq saw a decrease of 1.3%. The credit card issuer and global payments company's shares have seen a decrease of 0.52% over the last month, not keeping up with the Finance sector's gain of 1.24% and the S&P 500's gain of 3.55%. The investment community will be paying close attention to the earnings performance of American Express in its upcoming release. The company is expected to report EPS of $3.86, up 10.6% from the prior-year quarter. At the same time, our most recent consensus estimate is projecting a revenue of $17.69 billion, reflecting a 8.34% rise from the equivalent quarter last year. For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $15.2 per share and a revenue of $71.27 billion, representing changes of +13.86% and +8.06%, respectively, from the prior year. Investors should also pay attention to any latest changes in analyst estimates for American Express. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the business outlook. Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system. The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.14% upward. Currently, American Express is carrying a Zacks Rank of #3 (Hold). In terms of valuation, American Express is currently trading at a Forward P/E ratio of 19.6. For comparison, its industry has an average Forward P/E of 11.21, which means American Express is trading at a premium to the group. It's also important to note that AXP currently trades at a PEG ratio of 1.45. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Financial - Miscellaneous Services industry currently had an average PEG ratio of 0.98 as of yesterday's close. The Financial - Miscellaneous Services industry is part of the Finance sector. Currently, this industry holds a Zacks Industry Rank of 137, positioning it in the bottom 45% of all 250+ industries. The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Ensure to harness to stay updated with all these stock-shifting metrics, among others, in the next trading sessions. 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 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
12-06-2025
- Business
- Globe and Mail
2 Warren Buffett Stocks to Buy Hand Over Fist and 1 to Avoid
Warren Buffett's value-oriented, buy-and-hold approach isn't everyone's preferred stock-picking style. The fact is, it works. Over the course of the past three decades, Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has more than doubled the performance of the S&P 500, and it is still widening the gap. That's why you'd be wise to poach a few of Buffett's picks for yourself. Just remember that not every name Buffett has picked to be part of Berkshire's portfolio has panned out as initially hoped. To this end, here's a rundown of two Warren Buffett stocks to buy hand over fist sooner rather than later, and one Buffett stock you may not want to touch with a 10-foot pole. Buy American Express Through steady growth and the sheer attrition of its other stock selections, American Express (NYSE: AXP) has quietly become Berkshire Hathaway's second-biggest holding. As of the most recent look, Berkshire is sitting on 151.6 million shares of AmEx, collectively worth $45.6 billion. That's 16% of Berkshire's overall stock portfolio, and 21.6% of American Express itself. American Express is, of course, a credit card company, in the same vein as Mastercard and Visa. Except the comparison isn't a great one. Visa and Mastercard operate card-based payment networks meant to serve card issuers like banks or merchants. American Express is a payment middleman as well as the issuer. And yet, that description still doesn't do the company justice. AmEx's core business is actually managing a perks and rewards program built around a credit card platform that encourages the revenue-bearing usage of its plastic. Indeed, some cardholders will pay as much as $700 per year in exchange for hotel discounts, credit toward entertainment and ride-hailing, access to airport lounges, and more. While the upfront annual fee is steep, for more affluent spenders who don't worry too much about the economy, it's an investment that pays for itself in almost any environment. In this vein, despite the current economic headwinds, AmEx grew its top and bottom lines by 6% year over year during the first quarter of 2025. The analyst community expects both to accelerate later this year and beyond. Be warned that American Express stock isn't exactly cheap right now. Shares trade at about 20 times this year's expected earnings and a tad above the analysts' consensus price target of $294.46. Don't sweat that too much, though. As Buffett himself has often explained, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Quality usually ends up more than paying for itself. Buy Domino's Pizza Plenty of investors are still a bit surprised Berkshire Hathaway started building a position in Domino's Pizza (NASDAQ: DPZ) late last year. While not a bad company, it's not quite Warren Buffett's usual kind of pick. And perhaps someone besides Buffett made the call. Whatever the backstory is behind this trade, it's more Buffett-esque than it may seem. Chief among the qualities that the Oracle of Omaha likes to see in any investment is the durable profitability of the pizza business itself. There's not a lot of overhead involved here, since most Domino's Pizza locales are small-footprint carry-out or delivery stores that can be run with a minimal amount of staff. The ingredients needed to make a pizza are also relatively cheap, while the pizza-making process itself is relatively simple. Pizza pricing is also fairly elastic, if greater input costs force price increases. Of course, pizza is consistently marketable as well. There's good reason, however, Berkshire specifically chose Domino's. It's not only the biggest name in the business with over 21,300 stores, but it's also one of the best-run pizza chains. The company hasn't failed to turn a quarterly profit in over a couple of decades, and not counting the period after the COVID-19 pandemic's peak -- when food delivery finally slowed down -- Domino's has produced reliable profit growth too. It's clearly doing something right. Data by YCharts. Berkshire's stake in Domino's Pizza isn't huge, at least not yet. It's only got about 2.6 million shares of the pizza chain worth roughly $1.2 billion. For perspective, that's less than 1% of the value of all of Berkshire Hathaway's stock holdings combined. But the fact that Buffett and his lieutenants are interested in owning even a relatively tiny stake in Domino's still speaks volumes about what they see for its future. Avoid Kraft Heinz Kudos to Warren Buffett and his team for being patient with Berkshire's position in Kraft Heinz (NASDAQ: KHC). Its 326 million shares are currently trading down more than 70% from their 2017 peak, and are knocking on the door of 2020's multi-year low thanks to four years of subpar performance from the company itself. Berkshire isn't giving up, though, even though most other investors are. And perhaps Buffett and his team will eventually be vindicated. There's certainly no denying Kraft Heinz has some of the best brand names in the food business to work with, after all. Things have been so bad for so long here, however, that interested investors might be better served by not jumping into a name Berkshire Hathaway likely wishes it had dumped a while back. Now it can't -- at least not without facing some serious credibility fallout. Not only would an exit lock in a sizable loss, but such a sale would put the spotlight back on the fact that Buffett largely helped orchestrate the 2015 merger of Heinz and Kraft that was supposed to create an unstoppable food powerhouse. It never happened, though, proving that even the Oracle of Omaha doesn't get things right every single time. So what went wrong? At the time, the premise of a pairing made enough superficial sense. Several high-profile mergers and acquisitions in the early 2000s had panned out nicely, like ExxonMobil, Facebook's purchase of Instagram, and Google's 2006 acquisition of YouTube. Moreover, the food business itself is a simple one that tends to see higher margins with greater scale. There was corporate-culture friction for Kraft Heinz from the get-go, however, and perhaps worse, not enough of the right people were focusing on the actual underlying motivation for doing the deal in the first place. That motivation was slowing sales growth for the entire (and highly saturated) food production industry, which was finally allowing smaller players to chip away at the titans' dominance of the business. At the same time, consumers themselves were changing. Most of them became far more interested in more narrowly focused options and brands, making Kraft Heinz's now-bigger size even more of a liability. This would have been a tough shift for anyone to see at the time, including Warren Buffett. Yes, this stock's forward-looking dividend yield of 6% is compelling. Just keep in mind the quarterly dividend payment hasn't budged since being dialed back to $0.40 per share in 2019. It's not clear when -- or even if -- the company might be in a safe enough position to start raising it again. Should you invest $1,000 in American Express right now? Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor 's total average return is996% — a market-crushing outperformance compared to174%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025 American Express is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Domino's Pizza, Mastercard, Meta Platforms, and Visa. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
Globe and Mail
07-06-2025
- Business
- Globe and Mail
Is American Express Worth Buying Right Now?
American Express (NYSE: AXP) is one of the stocks owned by Warren Buffett within Berkshire Hathaway 's stock portfolio. That fact alone is enough to get some investors to buy the stock. However, you really need to consider other factors, like the business behind the stock, as well as its price tag. Here's a look at whether American Express is worth buying right now. American Express has a great business American Express is a financial giant, acting largely as a payment processor. The company's logo adorns credit cards that get used in retail establishments and online. Each transaction generates fee income for American Express. It issues its own cards, too, so it generates card/membership fees directly from customers there, as well. One differentiation between American Express and its peers is that Amex, as it is often called, focuses on more affluent customers. Wealthier consumers tend to be more resilient during economic downturns. Basically, they have the money to keep spending even as less affluent consumers hunker down. That means that Amex's business will usually perform relatively well during recessions and other periods of economic uncertainty. So far, 2025 has been filled with uncertainty. From tariff fights to stock market corrections, the news has been filled with negative headlines. In fact, American Express' stock price fell along with the S&P 500 (SNPINDEX: ^GSPC) earlier in the year. And it has recovered along with the index as well, as investors regained confidence. What's notable, however, is that American Express' price moves have been more dramatic than the market's moves. AXP data by YCharts American Express is still below its high-water mark That's an interesting sign, since it could mean that Amex's stock has more recovery potential ahead of it. Given the strength of its business model, that isn't an unreasonable assessment. However, there's also a negative way to view the price swing. It could very well be that investors got overly enthusiastic about the business and bid the price up to unrealistic levels earlier in the year. And the return toward those levels just indicates that investors are, again, being overzealous with their expectations. A look at traditional valuation metrics, perhaps unfortunately, suggests the second explanation is the more likely one. American Express' price-to-sales ratio is currently around 3.1, compared to a five-year average of 2.6. The price-to-earnings (P/E) ratio is currently about 20.5, versus a longer-term average of just under 19. And the price-to-book value ratio is 6.6 today, compared to a five-year average of roughly 5. All three metrics suggest that American Express is expensive today. And they are buttressed by a nontraditional valuation tool: dividend yield, which falls as share price rises. American Express' dividend yield is about 1.1% today. Not only is that less than the already miserly 1.3% yield you could collect from the S&P 500 index, but it is also near the lowest levels of the past decade. Again, the direction is pretty clear: Amex looks expensive. American Express is a great business There's a reason Warren Buffett owns American Express. It is a well-run business with some clear advantages over its peers. Buffett didn't just buy Amex -- he's owned it for many years. And sticking with a good company is part of Buffett's investment approach. However, Buffett's mentor, Benjamin Graham, made an important observation that investors looking at American Express today should heed: Even great companies can be bad investments if you pay too much for them. And it looks like American Express is too expensive right now. Should you invest $1,000 in American Express right now? Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Yahoo
29-05-2025
- Business
- Yahoo
American Express (AXP) Stock Moves -0.14%: What You Should Know
American Express (AXP) closed the latest trading day at $293.36, indicating a -0.14% change from the previous session's end. This move was narrower than the S&P 500's daily loss of 0.56%. Elsewhere, the Dow saw a downswing of 0.58%, while the tech-heavy Nasdaq depreciated by 0.51%. Prior to today's trading, shares of the credit card issuer and global payments company had gained 10.01% over the past month. This has outpaced the Finance sector's gain of 5.39% and the S&P 500's gain of 7.37% in that time. Analysts and investors alike will be keeping a close eye on the performance of American Express in its upcoming earnings disclosure. The company is predicted to post an EPS of $3.84, indicating a 10.03% growth compared to the equivalent quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $17.69 billion, reflecting an 8.34% rise from the equivalent quarter last year. For the full year, the Zacks Consensus Estimates project earnings of $15.18 per share and a revenue of $71.27 billion, demonstrating changes of +13.71% and +8.06%, respectively, from the preceding year. It's also important for investors to be aware of any recent modifications to analyst estimates for American Express. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability. Our research shows that these estimate changes are directly correlated with near-term stock prices. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system. The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.01% upward. At present, American Express boasts a Zacks Rank of #3 (Hold). Looking at its valuation, American Express is holding a Forward P/E ratio of 19.35. This expresses a premium compared to the average Forward P/E of 10.85 of its industry. Meanwhile, AXP's PEG ratio is currently 1.43. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As of the close of trade yesterday, the Financial - Miscellaneous Services industry held an average PEG ratio of 0.97. The Financial - Miscellaneous Services industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 37% of all 250+ industries. The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Keep in mind to rely on to watch all these stock-impacting metrics, and more, in the succeeding trading sessions. 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 American Express Company (AXP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
