Why American Express Stock Is Back In Focus After Q2 Results

American Express (AXP) has moved back onto many watchlists after reporting stronger second quarter earnings, raising full year revenue guidance, and highlighting heavier marketing and customer engagement spending.

For investors, this mix of higher expected revenue, firmer recent profitability, and rising expense concerns creates a fresh moment to reassess what the current stock price implies about future performance.

American Express has seen its share price slip 1.8% over the last day and 2.0% over the past month. However, an 8.4% 90-day share price return and a 17.5% one-year total shareholder return suggest momentum has been rebuilding around earnings, buybacks and the recent preferred share issuance at a US$342.60 share price.

If American Express’s recent moves have you rethinking your watchlist, it could be a good moment to broaden your search with other financials and payments peers and check out the 20 top founder-led companies

Bulls see American Express using strong Q2 earnings, higher revenue guidance and heavy marketing to justify its recent valuation. Bears point to rising expenses and softer year to date returns. Which story does the valuation actually support?

Most Popular Narrative: 8.6% Undervalued

On the latest numbers, American Express’s fair value narrative of $374.94 sits above the $342.60 last close, which puts extra weight on the growth and margin assumptions behind that gap.

Robust credit quality and risk management, as demonstrated by industry-leading performance in the Fed's stress tests, enable American Express to pursue premium lending strategies and balance sheet growth without a commensurate rise in credit costs, supporting margin expansion and earnings resilience.

Curious what needs to happen for that higher fair value to stack up. The narrative leans on steady revenue expansion, firm margins, and a premium profit multiple. The exact mix of growth, buybacks, and profitability expectations might surprise you.

Result: Fair Value of $374.94 (UNDERVALUED)

However, this depends on American Express containing higher customer engagement costs and avoiding a squeeze from rivals that are refreshing premium cards and promoting alternative payment options.

Next Steps

Given the mix of risks and rewards around American Express, it makes sense to review the numbers yourself and decide how the story fits your portfolio. To see how the current narrative balances both sides, check out the 3 key rewards and 1 important warning sign

Looking For More Investment Ideas Beyond American Express?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.