AXP
💳 American Express saw Q1 revenue grow 7%, driven by commissions and net interest income, though net profit grew slower at 6% due to higher customer engagement costs (rewards) rising 14%.
📈 Despite cost pressures, share buybacks boosted Earnings Per Share (EPS) growth to 9%, and the company maintained its full-year guidance for 8-10% revenue growth and faster EPS growth ($15.25 midpoint).
👍 AXP benefits from a high-quality, premium customer base with credit losses remaining controlled and below pre-pandemic levels, trading at an estimated forward PER of 16, which the speaker views more favorably due to perceived business predictability compared to UNH.
@invertirdesdecasa:
“American Express, which recently traded between $215-$220 per share, closed at $250 on April 17th, showing modest growth of 8.7% over the last year (excluding dividends) due to a recent pullback. Amex has a broader business model than Visa or Mastercard, acting somewhat like a bank by lending money, charging interest, and holding deposits. It also charges merchants discount rates and earns commissions. Q1 saw total revenue grow 7%, with good performance in commissions and net interest income. However, variable customer engagement costs (like rewards points for travel) grew faster at 14%, outpacing revenue growth. While other operating costs were managed well, the higher variable costs led to total costs growing slightly faster than revenue, resulting in net profit growth of 6% (to nearly $2.6 billion). Despite this, significant share repurchases boosted EPS growth to 9% ($3.64 per share). The company highlighted the strength of its premium customer base, noting that credit metrics (like 30-day delinquencies and write-offs) remain healthy and below pre-2020 levels. American Express maintained its full-year 2025 guidance, expecting revenue growth of 8-10% and EPS around $15.25 (midpoint), driven by buybacks and cost management. This guidance implies a forward Price-to-Earnings ratio of about 16 times based on the $250 share price. Although Amex’s PER multiple (16x) is slightly lower than UnitedHealth’s (18x), the speaker feels more comfortable with Amex due to its perceived business predictability, particularly the spending habits of its premium US customer base, compared to the complexities and recent cost issues facing UnitedHealth in the healthcare sector.”
Watch the exact part of the video where @invertirdesdecasa talks about American Express here:
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