Global integrated payments company American Express Company AXP closed 2024 performance on a high note, reporting impressive fourth-quarter results. Strong card member spending and fee growth fueled its performance alongside new customer acquisitions, particularly among Millennials and Gen Z.

Key Highlights From AmEx’s Q4

EPS: $3.04, beating estimates by 0.33% and up 16% YoY.

Network volumes: $464 billion, up 7% YoY.

Commercial Services: Pre-tax income of $814 million rose 22% YoY.

Revenue outlook: 8-10% growth expected in 2025 from $65.9 billion in 2024.

EPS guidance: $15-$15.50 for 2025, up from $13.35 in 2024.

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With momentum on its side, AmEx remains confident in its growth trajectory.

AmEx’s Favorable Estimate Revisions

American Express has seen its earnings estimates for 2025 and 2026 move north over the past month. The Zacks Consensus Estimate for 2025 earnings indicates a 14.9% year-over-year increase, while 2026 earnings are expected to grow by 14.4%. Revenue estimates for 2025 and 2026 indicate year-over-year growth of 8.6% and 8.3%, respectively.

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The company has a strong track record of exceeding earnings estimates, with an average surprise of 6.9% over the past four quarters.

AmEx’s Price Performance

Despite an initial dip post-earnings due to several factors, including major macroeconomic ones, AmEx rebounded as investors recognized its potential. If we look at its past three-month price performance, AXP jumped 11.3%, outperforming the industry and the S&P 500 Index. During this time, its peers like Mastercard Incorporated MA and Synchrony Financial SYF have gained 8.1% and 6.9%, respectively.

3-Month Price Performance – AXP, MA, SYF, Industry & S&P 500

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AmEx’s Valuation Indicates Investor Confidence

From a valuation perspective, American Express is trading at a premium, reflecting strong investor confidence and heightened market optimism about the company's growth prospects within the payments landscape. Going by its price/earnings ratio, the company is trading at forward earnings multiple of 20.61X, higher than the industry average of 17.23X. 

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Why AmEx’sRally Can Continue

AmEx thrives by leveraging its unique dual role as both a bank and a credit card network. Strong credit performance and operational efficiency drive its profitability while rising cardmember spending and expanding lending operations provide stability in changing economic conditions.

Even legendary investor Warren Buffett has held AmEx stock for decades, drawn to its profitable business model. Unlike many competitors, AmEx acts as both the issuer and the network operator, allowing it to capture a larger share of transaction economics, making its business more lucrative than some of the biggest players in the payments space.

A loyal customer base, strong card acquisition rates, and impressive retention levels further fuel AmEx’s success. The company expects its premium clientele to remain a major revenue driver, particularly through card fees. Additionally, AmEx is doubling down on younger generations, focusing its marketing efforts on Gen Z and Millennials. While these groups typically spend less than older customers, AmEx sees this as a long-term growth strategy aiming to build lasting brand loyalty.

Financially, AmEx remains in a strong position. With a net debt-to-capital ratio of 6.9% — well below the industry average of 13.4% — it has ample financial flexibility. The company also returned value to shareholders by repurchasing 3 million shares in the fourth quarter of 2024 and plans to boost its dividend by 17% to 82 cents per share starting in first-quarter 2025.

Should You Buy AmEx Stock Now?

Spring is arriving soon, and once again, stocks — particularly in the financial sector — are likely to outperform many of their counterparts thanks to seasonal trends, economic cycles and investor behavior. With tax refunds in hand, analysts expect consumers to increase spending on different things, which leads to higher loan demand and more transactions for financial institutions. AXP, with its expanding network, is well-positioned to capitalize on this trend, attracting investors looking for short-term gains.

For long-term investors, the company’s evolving customer mix is a positive sign. AmEx’s transformation into a sought-after, accessible status symbol for younger consumers is a compelling long-term strategy, one that many competitors are eager to replicate. The stock is currently trading above both its 50-day and 200-day simple moving averages, indicating strong upward momentum.

With its mix of growing value, growth potential and business resilience, AmEx is an attractive addition to any portfolio. The stock currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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