A new record was set this week for American Express (AXP). Shares of American Express (AMEX) have soared about 90% since their 52-week low of $89.11 in October last year. Its share price increased 40% against 6% and 9% for Mastercard (MA) and Visa (V) in the stock market. Over the entire 27-month period since inception, AXP shares have appreciated 56%, an amount similar to earnings seen by Mastercard and Visa. These numbers show two different ways to reach EPS of $6.00-7.50 by the end of 2021.
The starting range was $8.85 to $9.25, and the corporation has set a goal to return to that range by 2022. Analysts believe this shows that American Express has not benefited from the Pandemic’s rapid migration to electronic payments. In the first quarter of 2019, American Express’ volume was 11% higher than in 2019, still considerably below Mastercard and Visa levels. With its counterparts, American Express lost card members during the flu outbreak. However, due to the number of American Express cards that had already stopped gaining strength in 2019, it would be stagnant in the future (about 114 million). It dropped to 111.5 million at the end of the third quarter of 2020, but has since rebounded to 112.9 million at the end of 2021.
Net interest income is 21% lower, but the first quarter of 2021 will still see a decline of 12% in revenue compared to the previous year due to a 10% reduction in discount revenue (due to less expenses) and a 21% reduction in revenue Gross Interest Margin. On the other hand, Mastercard sales increased 4%. In American Express stock, prices are 20.7 times the projected earnings per share for 2019 and 2022. This is a 25% discount from the peak prior to COVID. The dividend yield for American Express stock is $1.72 per year, which results in a 1% yield. Due to Federal Reserve restrictions on repurchases, the corporation has accumulated excess capital until 2020.
The challenge is whether American Express will return to double-digit EPS growth of at least 10% per year through 2023. Analysts believe it to be highly EPS growth is likely to fail to meet its target of returning to double-digit growth after 2023, which would cause a drop in P/e.
American Express: preparing to fly
American Express is one of the oldest credit card companies in the United States. At the beginning of the epidemic, the company’s revenues declined, but it is currently experiencing an increase in sales volume. Throughout the epidemic, American Express’ loan balances declined, while accounts receivable from cardholders remained unchanged. Projected sales are expected to remain stable but are expected to increase. An analyst forecast predicts that Amex will have revenue growth of 2021, around 8.7% in 2022, 13.43% in 2023, to 9.83% return on equity. For all its incredible benefits, American Express also faces some obstacles. The higher interest rates the company can charge on its loans, coupled with the rise of the travel and entertainment sector, put the company at risk.
Many analysts project that Amex will be able to reduce $19 billion in debt next year. American Express reduced its interchange fees in reaction to ongoing litigation and analysis from the European Union and Australia. By taking this action, the corporation has pushed down its discount rates, representing the largest share of corporate profits and earnings. American Express has already witnessed the first signs of life in the travel and leisure industry after the Pandemic.
Toward the end of the Pandemic, the company was on the right track and had a good lead-in getting back to profitability. Although, the demand for travel will also return, as the Pandemic subsides, the opportunity to invest is now.
Profit from American Express: great price
American Express (AXP) provided a beat higher profits than expected, although revenue declined 12%. During the first quarter, the results of the company’s financial services provider were satisfactory and comparable to the rate of economic growth and credit quality. While most of the company’s overall businesses are fully recovered from the troubles of 2020, a substantial percentage of them have already recovered. Pre-pandemic, American Express currently predicts that it will reach its initial pre-pandemic 2020 EPS target next year. As a result, the price/earnings ratio (P/E) for next year should be 16.7, which is somewhat moderate compared to other financial services companies whose P/E ranges from 19 to 20. With inventory at more than 200% from its 12-month low, I believe it’s a buy now at current prices before T&E fully recovers. Investors begin to appreciate this powerful payments company for its solid fundamentals.
AXP American Express Company Stocks
American Express Company (AXP) stocks have plunged last year, and for a good reason. The company’s share price has dropped more than 30% over the past 12 months. And while credit card companies have struggled for several years, AmEx’s declines have been steeper than competitors like Visa (V) and Mastercard (MA). As a result, the company’s share price is currently at $168.50, a level not seen in over six years.
What is American Express Company
American Express is a credit card company. It was founded in 1850 in New York City and now operates in several countries around the world. One of the main parts of the business is the charge card business, it was the first to create the credit card in the United States. Although, since then, the company has become a dominant player in the financial sector, the credit card business is primarily responsible for American Express’ operating income and operating profit. This means that AmEx is paid whenever someone uses their credit or charge card to make purchases. In other words, American Express’s main business is to receive money from merchants and consumers every time someone uses their cards.
Why American Express Company’s Stock Price Is So Low
AMEX’s problems have little to do with its actual finances. The company’s revenue and earnings per share have grown consistently over the past few years. It also generated hundreds of billions of dollars in free cash flow. What has plagued AmEx is its capital and credit card business. In addition, American Express faces challenges from new payment technologies such as Apple Pay. But more importantly, the company has struggled to stem the tide of customers defecting to competition, especially online and mobile payments. Last year alone, AmEx lost nearly 5% of its purchase volume, according to Payment Source. This is a tough trend to reverse.