AXP - American Express: Write-Offs And Valuation Risks Make It A Hold

2024-05-30 15:32:13 ET

Summary

• American Express Company stock has seen significant price advancement, outpacing the S&P 500 Index.
• Key drivers include strong demand from Millennial and Gen Z customers, which should continue, in our view.
• However, we are concerned over the provision for credit losses and the subsequent risks in the face of macroeconomic uncertainties, which could cause even higher delinquency rates.
• Moreover, we are also concerned about American Express Company's current valuation, which is quite high even with its projected growth and dividends factored in.

AXP stock trades near all-time-high prices

Stockholders of American Express Company ( AXP ) have been rewarded handsomely recently. As illustrated by the chart below, the stock has enjoyed a price advancement of nearly 50% in the past 12 months alone, far outpacing the S&P 500's (SP500) ~30% gain (which is already terrific by itself)....

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