Where Will American Express Stock Be in 3 Years?

Core Viewpoint - American Express remains a promising long-term investment, having outperformed the market with a nearly 60% stock rally over the past three years compared to the S&P 500's 20% increase [4]. Business Model and Market Position - American Express operates as both a payment processor and a card issuer, unlike Visa and Mastercard, which only provide payment processing networks [5]. - The company prioritizes high credit scores for its cardholders, making its cards status symbols, but this limits its customer base and acceptance among businesses, especially internationally [6]. Recent Performance and Recovery - The company experienced a significant slowdown in 2021 due to the pandemic but rebounded strongly in the following two years, reducing its number of outstanding shares during this period [7]. - American Express reported a diluted EPS growth of 166% in 2022, followed by a 14% growth in 2023, while maintaining a low delinquency rate of 1.2% for card member loans over 30 days past due [8][9]. Future Growth Expectations - For 2024, American Express anticipates revenue growth of 9% to 11% and EPS growth of 19% to 23%, driven by recovery in the U.S. consumer market and international expansion [8]. - Analysts project a compound annual growth rate (CAGR) of 9% for revenue and 15% for EPS from 2023 to 2026, supported by an improving macro environment [10]. Stock Price Projections - If American Express meets analysts' estimates and achieves a 15% EPS growth in 2027, its stock price could rise over 30% to the low $330s within three years [11]. - The stock is expected to match or exceed the S&P 500's average annual return of about 10% over the past 30 years, which aligns with Berkshire Hathaway's continued investment in American Express as its second-largest position [12].