Jordan
Long-Term Stock Investor, Compounding & Portfolio Construction
American Express is an underrated compounder that should keep compounding for decades, and being down 18% this year as a victim of sitting outside the AI buildout makes this one of the better times to accumulate it. Weak acceptance in the UK, raised by @jordanthewlis92, is an opportunity rather than a problem, since the UK is still well under 10% of revenue and rewards can be made more appealing there. x.com x.comÂ
Growing card spending and raised adjusted EPS guidance strengthen American Express's earnings outlook. Billed business rose 8% and adjusted EPS rose 13%; the new $17.60-$17.90 full-year adjusted EPS range implies 14-16% growth. The 31% GAAP EPS rise was helped by one-time tax benefits, while lower credit provisions partly reflect a reserve release despite higher write-offs. x.com x.comÂ
American Express is the kind of company every investor wants, with dividends per share rising as its share count shrinks. A list of high-quality compounders puts it at 18x earnings with a 3.8% shareholder yield, buying back about 2.5% of its shares a year. x.comÂ
AI agents will erode credit card banks' pricing power. Since the GFC, uncompetitive card issuers have raised rates disproportionately in hiking cycles and barely cut them in easing cycles. Agents will let uninformed consumers refinance at much lower rates and make card points costlier as consumers optimize rewards. Medium term, that is net negative for JPMorgan, Citigroup, Capital One, American Express and Bank of America, and net positive for unsecured personal lenders such as SoFi and Upstart. … Show more
American Express's credit risk keeps its multiple below Visa's or Mastercard's, but that persistently low valuation lets management retire shares steadily. At 16x forward earnings it is not especially cheap by its own history; 28% of shares were retired over ten years. Buying here looks more like owning a steady cash-returning compounder than expecting extraordinary returns. x.comÂ
American Express's continued growth makes its lower forward multiple than Mastercard and Visa a very attractive long-term opportunity. It trades at 16.7x forward earnings against more than 26x for each peer. All three sold off earlier this year, but Mastercard and Visa reached new highs while American Express remains down 15.6% year to date. x.comÂ
Airbnb's turn to American Express suggests it is about to abuse shareholders. American Express is the new Costco, where dying brands go to rot. x.com x.comÂ
Credit-card stocks American Express, Visa and Mastercard are among the best values in the current market. American Express's latest earnings look pretty good, and the charts show plenty of upside potential. x.comÂ
American Express ranks top among card companies because it focuses on wealthy clients, which brings higher margins, unlike the extremely low-margin businesses that rely on heavy transaction volume. x.comÂ
American Express is an incredible business with a strong premium brand, very resilient customers and a model that is hard to copy, strong enough to consider swapping it in for Visa or Mastercard. Demand for Platinum and Gold cards is very strong among people under 35 who love the rewards, bringing in wealthy young customers who can drive growth for a long time. Amex also has room to expand through new partnerships that make its cards accepted everywhere. x.comÂ
SoFi's revenue growth does not justify overlooking its earnings record and valuation relative to American Express. SoFi trades at 34x earnings despite GAAP EPS of $0.47 TTM, versus American Express at 19x with $16.48 TTM EPS and a long record of EPS growth. SoFi faces competition while American Express has a moat. x.com x.com x.comÂ