American Express (AXP) delivered third-quarter results that came in ahead of Wall Street estimates, prompting the company to raise its full-year revenue and earnings guidance. The update reflected strong cardmember spending, increasing travel activity, and momentum from its revamped Platinum card.

American Express has been on a tear, with shares jumping 7% after its latest earnings and guidance lift, capping a year where clear momentum has emerged. While recent headlines included a hefty buyback and a $2 billion bond issue, the standout is the company’s ability to keep premium customers engaged and spending. This has propelled a 35% total shareholder return over the past twelve months and an eye-popping 317% total return over five years. This blend of operational strength and market confidence has kept American Express firmly ahead of its peers, both short and long term.

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With American Express firing on all cylinders and the stock outperforming for years, the crucial question now is whether further upside remains for investors or if continued growth is already fully reflected in the price.

Most Popular Narrative: 5.7% Overvalued

Despite American Express’s strong run and ambitious guidance, the most widely followed narrative sees the fair value lagging last close by a meaningful margin. The story behind this view rests on market expectations for continued growth, but also recognizes limits on premium pricing and earnings multiples.

“In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $85.7 billion, earnings will come to $13.5 billion, and it would be trading on a PE ratio of 20.3x, assuming you use a discount rate of 8.4%.”

The driver behind this price? It’s all about aggressive forecasts for both top-line and bottom-line growth, as well as a future valuation multiple that sets a high bar. Think these expectations are bold? Wait until you see the full set of assumptions that fuel this narrative’s premium price target.

Result: Fair Value of $338.24 (OVERVALUED)

However, risks remain. Intensifying competition and shifting consumer preferences could challenge American Express’s growth assumptions and put pressure on future earnings.

Build Your Own American Express Narrative

If you see things differently or want to dive deeper, try building your own American Express outlook in just a few minutes. Do it your way

A great starting point for your American Express research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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.