Opinions Jim Cramer - Mad Money
American ExpressAXPBUY ON WEAKNESSJul 22, 2024
Jim Cramer - Mad MoneyStock price when the opinion was issued
As of Aug 14, 2026. Market Open.
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They just reported in-line revenue and an earnings beat, but shares fell 4.3% last Friday. Today, it bounced 2.8%. It's a terrific buying opportunity as usual after they report. Their billed business jumped 9% over the year while revenue was a little light. They raised their full-year forecast, but not on earnings. The market read this is as a cut. Travel and entertainment is up a strong 13%. Gen Z spending is up 40%, and Boomers only 5%. 75% of global new accounts were acquired on fee-paying cards. Platinum cards were the fastest-growing in the US last year. The only negative was not raising their full-year earnings forecast.
Very different from MA and V. Reports as a bank, and is regulated as such. Relationships with both customers and merchants. High-end customer base. Great growth rate of ~10%, double-digit ROE. Trades in high teens PE, expensive for a bank but not for the quality of offerings. Yield is 1.05%.
(Analysts’ price target is $379.96)
Martin Cobb, ASIPDifferent from MA and V. Fallen because of AI fears. Years of data on both customers and merchants, whereas Visa doesn't really have that. Should greatly benefit from AI. Reasonable valuation.
He bought some more this morning. Yield is 1.08%.
John O'Connell, CFA
Double-digit earnings growth year after year. Last quarter was strong again. Stock remains cheap.
Lorne SteinbergAXP is a smaller name (roughly half the size of V), but its sales have grown similar to V over the past year, and AXP still trades at a slight discount to V. Both are expecting similar levels of forward sales and earnings growth over the next few years, but AXP is expecting to see slightly higher earnings growth rates. AXP's outperformance has been driven by strong cardholder spend growth and rising fee/interest income, but its business model can be more sensitive to economic cycles, credit risk, and consumer behavior shifts than V. Overall, we think both are solid options, but due to its positive momentum, strong fundamentals, and slightly cheaper valuation, we would give AXP the slight edge today.
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Last Friday they reported a strong quarter, but shares still fell 2.3% and 1.6% today. They reported 7% billed business growth better than expected; revenues also beta. They reiterated 8-10% revenue growth and 12-16% EPS growth, full year. But they said that there was softer spending in airlines and lodging which spook investors. But AXP's delinquency rates are far below the industry average, Gen Z spending was +39% YOY while Millennial spending was +10%, and they added 3.1 million cards in Q2, 63% of which were Millennials or Gen Z.
Earnings and revenues beat, with a 20% jump in card fees. Their customers are high-end consumes who are still doing well (consumers are bifurcated, either doing well or struggling). Their delinquency rate is a superb 1.3%. Trades at only 18x earnings, with 14% earnings growth ahead.
They reported a good quarter last Friday, but shares fell around 2.5%. Total revenue was 8% YOY and billed business 5% YOY. Adjusted EP up 21% and raised their full-year earnings forecast. But the street's expectations were too high going into the quarter, and shares were up year to date far higher than Visa or Mastercard. Also, AXP has slowing revenue growth from 11% in Q1 to 8%--this is key. Elevated marketing expenses concern the street, marketing to keep customer spending "elevated". But if earnings growth is good, who cares? This dip makes AXP a buying opportunity. AXP is killing it, making their earnings targets in the double digits. It doesn't get enough credit for its earnings growth. Spending by Millennials and GenZers is up 13%. And their marketing expenses are attracting these young customers.