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American Express Sees Strong EPS and Revenue Growth Potential

Strong results prompt investors to reconsider American Express. The company reported a 25% rise in diluted earnings per share and 9% revenue growth. With a solid outlook for 2025, AXP remains an appealing investment opportunity for long-term growth.

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AI Rating:   7

Earnings Per Share (EPS): American Express reported a diluted earnings per share of $14.01 for 2024, marking a significant increase of 25%. This impressive growth in EPS indicates the company's profitability and ability to deliver value to shareholders, which positively affects stock prices.

Revenue Growth: The company achieved a 9% increase in total sales, reaching $65.9 billion for 2024. The projected revenue growth for 2025 remains at 9%, indicating stability and consistency in its income streams. Continued revenue growth enhances investor confidence and can lead to higher stock prices.

The positive news comes with some caution, as American Express expects slower growth in the first quarter due to fewer days and a stronger dollar. However, management has reassured that overall full-year guidance is intact. This indicates a proactive approach by management to mitigate short-term challenges while maintaining focus on long-term objectives.

American Express's strategy to attract younger customers appears to be fruitful. The addition of 13 million new cards, with a significant portion being fee-paying products, reflects a growing customer base. Notably, the increase in spending by Gen Z and millennials, which saw a 16% rise, indicates potential for future revenue growth as this demographic matures and seeks more financial products.

Despite a remarkable 48% rise in stock price over the past year, American Express's shares are trading at a relatively low forward price-to-earnings ratio of 20 versus the S&P 500's ratio of approximately 24. This valuation suggests that the stock could be undervalued considering its growth potential and can serve as a strong indicator for investors looking for buying opportunities.

Overall, the favorable EPS growth, sustained revenue increases, and strategic positioning within the market make American Express a compelling investment. The current stock price may motivate investors to buy or increase their holdings ahead of anticipated growth in the coming year.

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