American Express(US:AXP) ZACKS·2025-12-04 18:56Core Insights - American Express Company (AXP) is currently trading above its long-term averages, with a forward P/E of 21.17X compared to its 5-year median of 17.27X, indicating a significant change in market valuation [1] - Despite this elevated valuation, AXP's P/E remains below the Zacks Financial - Miscellaneous Services industry's average of 24.22X [1] - AXP has a market capitalization of $253.6 billion, benefiting from a premium customer base and a closed-loop network [2] Financial Performance - In Q3 2025, AXP reported an 11% revenue growth and a 9% increase in network volume [6] - The company achieved a return on equity (ROE) of 35.9%, up from 33.9% year-over-year [2] - AXP's total revenues net of interest expense rose 11% year-over-year in Q3 2025, with expectations for 2025 revenues to increase by 9-10% from the 2024 base of $65.9 billion [8] Market Position - Over the past three months, AXP shares have increased by 12.8%, outperforming the industry's decline of 8.5% and the S&P 500's gain of 6.8% [3] - AXP's acceptance at around 160 million merchant locations worldwide has increased nearly fivefold since 2017 [8] Customer Engagement - AXP is experiencing strong spending from Gen Z and Millennials, with U.S. Consumer Services billed business rising 9% year-over-year in Q3 2025 [9] - The company leverages its relationships with luxury hotels and airlines to provide exclusive benefits, particularly for high-end cardholders [7] Shareholder Returns - As of September 30, 2025, AXP had $54.7 billion in cash and cash equivalents and generated $15.4 billion in operating cash flow, an increase of 85.7% year-over-year [10] - The company returned $2.9 billion to shareholders through buybacks and dividends in the last reported quarter [10] Earnings Estimates - The Zacks Consensus Estimate indicates a 15.6% earnings growth for 2025, followed by a 13.7% rise in 2026, with revenue estimates pointing to expansions of 9.3% and 8.3% for those years [11][13]