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Shares of American Express Company AXP have gained 69% in the past year compared with the industry’s 22.3% growth. The Finance sector and the S&P 500 composite index rallied 25% and 24.8%, respectively, in the same time frame. With a market capitalization of $220.2 billion, the average volume of shares traded in the last three months was 2.5 million.
American Express benefits from rising consumer spending, sustained travel demand, enhanced digital services and adequate cash generation abilities supporting investments and shareholder returns.
The leading globally integrated payments company with a Zacks Rank #3 (Hold) has a decent earnings surprise history. It beat earnings estimates in three of the trailing four quarters and missed the same once, the average surprise being 6.53%.
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Can AXP Retain the Momentum?
The Zacks Consensus Estimate for American Express’ 2025 earnings is pegged at $15.24 per share, indicating a 13.7% increase from the 2024 estimate. The estimate for revenues is $71.5 billion, implying 8.5% growth from the 2024 estimate.
American Express continues to experience robust revenue growth, largely driven by increasing discount revenues, which form a significant portion of its overall income. Rising consumer spending is fueling Card Member activity, thereby contributing to revenue expansion. Additionally, the resurgence in travel demand is expected to bolster service fees and other revenue streams. Over the long term, the company anticipates achieving revenue growth of 10%.
The company is strengthening its presence in the premium consumer market by offering enhanced membership benefits that address everyday expenses, borrowing needs, and travel and lifestyle requirements. Through strategic acquisitions and partnerships, American Express continues to enrich its card offerings and broaden its global footprint.
American Express remains committed to innovation, investing in new product launches and upgrades to existing offerings, which play a critical role in maintaining high Card Member retention. To stay competitive in the digital era, the company has enhanced its suite of digital solutions and services. Recognizing the increasing risks of cybercrime, American Express has also implemented robust fraud prevention measures to protect its customers.
The company's strong liquidity position is underscored by a healthy cash balance, sufficient to cover its short-term debt obligations. American Express's sufficient cash generation capabilities enable it to make significant investments in its business while also supporting shareholder returns through share repurchases and dividends. In March 2024, the company announced a 17% increase in its quarterly dividend. Moreover, it generated $8.3 million in net cash from operations during the first nine months of 2024.