American Express: A Fintech Powerhouse With Growth Momentum, Buy

Core Insights - American Express (AXP) has demonstrated strong growth with a revenue increase of 11% year-over-year in Q1 2024 and a 39% rise in EPS [1] - The company projects full-year revenue growth of 9% to 11% and EPS growth of 13% to 17% [1] - AXP's strong performance is supported by low delinquency rates and high credit quality [1] Financial Performance - AXP's revenue growth in Q1 2024 was 11%, with EPS increasing by 39% [1] - The company has increased its dividend by 17%, indicating a commitment to returning capital to shareholders [2][17] - AXP maintains a low payout ratio, suggesting potential for further dividend growth [2] Management Evaluation - CEO Stephen Squeri has a 38-year tenure with high approval ratings, indicating strong leadership and alignment with company success [7] - CFO Christopher Le Caillec, with 25 years of experience, is expected to continue the company's financial success and growth in dividends [17] Corporate Strategy - AXP focuses on growth in premium cards and attracting younger demographics through partnerships and benefits [11] - The company is expanding in international markets and aims to enhance customer satisfaction through frequent updates to their value proposition [8][11] - AXP's strategy includes leveraging fintech opportunities for learning and partnerships [8] Valuation - AXP currently trades around $231.55, with a year-to-date increase of approximately 24.38% [20] - The stock is considered undervalued based on a projected EPS growth of 10% and an analyst consensus CAGR of 15.11% over the next 3-5 years [12] - AXP's PEG ratio is 1.17x, which is in line with the sector median of 1.13x, indicating appropriate valuation relative to growth [12] Competitive Position - AXP leads in the premium credit card market with a strong global brand and solid customer base [19] - The company has industry-leading profitability metrics, including a ROA of 3.34% and ROE of 32.85% [17] - Despite higher fees associated with premium cards, AXP's focus on high-quality customers allows it to excel in profitability [19]