Deep Value Investing
Value Investor, Long-Term Compounding
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's solid earnings growth makes it worth continuing to buy and hold for years. Q3 revenue rose 9%, net income 28% and adjusted EPS 13%; American Express also raised its full-year EPS guidance. x.comÂ
Mastercard's payment and earnings growth make it more satisfying than ever to own amid Alphabet's and Amazon's post-earnings reactions. Q3 2026 revenue rose 14% to $9.8 billion, adjusted EPS rose 21% to $5.31, and adjusted operating margin was 60.5%. Volume grew 7%, cross-border volume 11%, and $3.8 billion went to shareholders through buybacks and dividends. 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 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
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
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
Visa's volume and earnings growth show its network benefits from the global shift to digital payments. FY revenue rose 15% to $45.9B, adjusted EPS 16%, payments volume 9% and cross-border volume 13%. One of the world's highest-quality businesses, it is among the few most comfortable to hold for the next decade. Adjusted operating expenses rose 16%, ahead of revenue; client incentives rose 16% to $18.3B but threaten margins only if they get out of control. Regulation and litigation remain risks. … Show more
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
