American Express’s SWOT analysis: stock resilience amid economic uncertainties

American Express (NYSE:AXP), a global leader in integrated payment services, has been navigating a complex economic landscape with a mix of strengths and challenges. According to InvestingPro analysis, AXP maintains a "GOOD" overall financial health score of 2.86, reflecting its strong market position as a prominent player in the Consumer Finance industry. This comprehensive analysis examines the company’s recent performance, market position, and future prospects, providing investors with a detailed view of AXP’s potential in the evolving financial services sector.

Company Overview and Recent Performance

American Express operates as a fully integrated payments company, serving as a card issuer, payment network, and merchant acquirer. The company’s market capitalization stands at approximately $206 billion as of June 2025, reflecting its significant presence in the financial services industry.

In the first quarter of 2025, AXP reported earnings per share (EPS) of $3.64, showcasing the company’s ability to maintain profitability amid economic uncertainties. The company’s revenue growth has remained solid, with consistent spending trends observed across its customer base. Current revenue stands at $62.05 billion with a healthy 9.05% growth rate, while maintaining a strong gross profit margin of 64.32%. Analysts project total revenue to grow from $60.5 billion in 2023 to $83.1 billion by 2027, indicating a robust growth trajectory. For deeper insights into AXP’s financial metrics and growth potential, consider exploring InvestingPro, which offers comprehensive analysis and additional ProTips.

Credit Trends and Loan Growth

American Express has demonstrated resilience in its credit portfolio, with recent data showing better-than-expected performance in net charge-offs (NCOs) and delinquencies (DQs). As of June 2025, U.S. Consumer Card NCOs were reported at 2.4%, slightly higher than analysts’ consolidated forecast of 2.37% for the same period.

Total (EPA:TTEF) loan growth has remained stable, with year-over-year increases consistently around 10-11%. This steady growth suggests a solid customer base and ongoing lending activity, despite macroeconomic pressures.

Market Position and Competitive Landscape

AXP’s premium card member base is viewed as a key strength, potentially shielding the company from some of the impacts of macroeconomic weaknesses. The company’s integrated business model, serving as both card issuer and merchant acquirer, provides a unique competitive advantage in the payments industry.

American Express faces challenges due to its higher exposure to discretionary spending sectors like travel and entertainment compared to competitors such as Visa (NYSE:V) and Mastercard (NYSE:MA). This exposure could make AXP more vulnerable during economic downturns, though its strong financial position, evidenced by a current ratio of 1.57 and an Altman Z-Score of 6.11, suggests robust financial stability. InvestingPro analysis reveals that AXP has maintained dividend payments for 55 consecutive years, demonstrating remarkable resilience through various economic cycles.

Future Outlook and Guidance

American Express has maintained its guidance for 2025, projecting revenue growth of 8-10% and aiming for mid-teens EPS growth. This outlook reflects management’s confidence in the company’s ability to navigate current economic conditions while continuing to expand its business.

Analysts expect operating earnings per share to increase from $11.21 in 2023 to $20.05 by 2027, with growth rates projected to rise from 13.9% in 2024 to 17.1% by 2027. The company currently trades at a P/E ratio of 20.68 and a Price/Book ratio of 6.63, suggesting premium valuations. While some analysts express concerns about AXP’s ability to achieve its mid-term revenue growth target of over 10%, given the current economic climate, the company’s return on equity of 34% demonstrates strong operational efficiency. Want to make more informed investment decisions? Access detailed valuation metrics and expert analysis through InvestingPro’s comprehensive research platform.

Bear Case

How might economic uncertainties impact AXP’s discretionary spending-reliant business model?

American Express’s significant exposure to discretionary spending sectors, particularly travel and entertainment, makes it more susceptible to economic downturns compared to its competitors. Historical trends suggest that during recessions, AXP could experience greater volume declines than payment networks with more diverse exposure.

The company’s reliance on premium customers, while generally a strength, could become a vulnerability if high-income consumers begin to curtail their spending in response to economic pressures. This could lead to reduced transaction volumes and potentially impact AXP’s revenue growth and profitability.

What challenges does AXP face in achieving its long-term revenue growth targets?

Achieving consistent revenue growth above 10% may prove challenging for American Express in the face of economic headwinds. The company’s growth is heavily dependent on new customer acquisition, particularly among Millennials and Gen-Z demographics. These younger consumers may be more financially vulnerable to economic pressures, potentially impacting AXP’s ability to maintain its growth trajectory.

Moreover, the need for increased marketing and rewards expenses to sustain billed business volumes could pressure profit margins. If consumer spending patterns shift or competition intensifies, AXP may find it difficult to balance growth initiatives with profitability goals.

Bull Case

How does AXP’s premium customer base provide resilience in economic downturns?

American Express’s focus on premium cardholders is a significant asset, potentially offering greater resilience during economic challenges. High-income consumers typically have more discretionary income and are less likely to default on their obligations, even in tough economic times.

The company’s customer base has become increasingly premium over the years, which could provide a buffer against credit deterioration. This high-quality customer portfolio may allow AXP to maintain stable credit metrics and continue generating revenue even when broader economic conditions are unfavorable.

What advantages does AXP’s integrated payment model offer over competitors?

American Express’s unique position as a fully integrated payments company sets it apart from many competitors. By acting as both the card issuer and merchant acquirer, AXP has greater control over the entire transaction process, from customer acquisition to merchant relationships.

This integrated model allows for more efficient data utilization, enabling AXP to offer tailored products and services to both cardholders and merchants. It also provides the company with multiple revenue streams and the ability to adjust quickly to market changes, potentially leading to more stable earnings and greater long-term growth opportunities.

SWOT Analysis

Strengths:

• Strong premium card member base
• Integrated payment model (issuer, network, and acquirer)
• Established brand recognition and loyalty
• Robust data analytics capabilities

Weaknesses:

• Higher exposure to discretionary spending sectors
• Potential vulnerability to economic downturns
• Higher costs associated with premium rewards programs

Opportunities:

• Expansion into younger demographics (Millennials and Gen-Z)
• Growth in digital payment solutions
• International market expansion
• Development of new financial products and services

Threats:

• Economic uncertainties and potential recessions
• Increased competition from traditional and fintech companies
• Regulatory changes in the financial services industry
• Shifts in consumer spending habits and preferences

Analysts Targets

• Barclays (LON:BARC): $249 (June 17, 2025)
• Barclays: $249 (May 16, 2025)
• Barclays: $249 (May 9, 2025)
• Redburn Atlantic: $255 (April 23, 2025)
• RBC Capital Markets: $310 (April 21, 2025)
• Barclays: $249 (April 21, 2025)
• Barclays: $249 (April 16, 2025)
• BofA Global Research: Buy (no price target given) (April 11, 2025)
• Barclays: $280 (March 18, 2025)
• Barclays: $280 (February 19, 2025)
• RBC Capital Markets: $350 (January 27, 2025)
• BTIG: $272 (January 27, 2025)
• Barclays: $280 (January 16, 2025)

This analysis is based on information available up to June 18, 2025, and reflects the current market conditions and analyst perspectives as of that date.

InvestingPro: Smarter Decisions, Better Returns

Gain an edge in your investment decisions with InvestingPro’s in-depth analysis and exclusive insights on AXP. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore AXP’s full potential at InvestingPro.

Should you invest in AXP right now? Consider this first:

Investing.com’s ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if AXP is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level.

To evaluate AXP further, use InvestingPro’s Fair Value tool for a comprehensive valuation based on various factors. You can also see if AXP appears on our undervalued or overvalued stock lists.

These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.