Alan Kral , CFA, CICAmerican ExpressAXPBUYApr 21, 2009

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%.

Different 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%.

She trimmed her big position. She bought it at 11x PE years ago to now 19x. 

Double-digit earnings growth year after year. Last quarter was strong again. Stock remains cheap.

It reports Friday. The stock always gets hit after reporting and it nearly always reports a good quarter. You must buy into this weakness.

AXP 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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Projected 12.6% earnings growth in 2026, yet trades at less than 20x PE 2026. He expects an upside surprise.

Superb CEO. Is up 15% in the last 6 months, and made new highs today.

It appears to be hitting an inflection point and is well below the market multiple.

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.

It always sells into the report.  It reports Friday. Wait. Run by a great CEO.

Will lead in the coming year over Visa and Mastercard, because AXP has a younger demographic and not built into the PE. That said, they're all great companies and can't lose.

Seeing profit-taking now. Is up 30% for the year. They're firing on all cylinders.