AXP - American Express: A Full Valuation Given Growth May Slow (Downgrade)

2024-05-20 17:48:47 ET

Summary

• American Express shares have performed well, rising 60% in the past year, thanks to its exposure to higher-income customers and strong growth with millennials.
• The company's recent financial performance has been positive, with earnings beating expectations and a better credit performance than peers.
• That said T&E spending may slow, which will contribute to slower earnings growth making its 18.5x valuation relatively expensive.

Shares of American Express ( AXP ) have been an excellent performer over the past year, rising about 60%. Its exposure to higher-income customers has helped to insulate the company from consumers’ diminished excess savings, and it continues to generate strong growth will millennials. I last covered AXP in December , rating shares a buy, and since then, AXP has returned 42%, though the extent of its rally has exceeded my expectations. As such, it is time to see if valuation has caught up to its solid fundamentals....

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