AmEx Trading Above 21X P/E: Playing Offense With a Higher Price Tag?

American Express Company AXP, also known as AmEx, has entered a valuation zone attracting increased attention, as shares now trade above their long-term averages. With forward 12-month earnings (P/E) of 21.17X, AXP appears quite high compared to its 5-year median of 17.27X, indicating a significant change in how the market is valuing the company. However, it still sits below the Zacks Financial - Miscellaneous Services industry’s average of 24.22X. It has a Value Score of C. Meanwhile, Visa Inc. V and Mastercard Incorporated MA command far richer premiums, with forward P/E ratios of 25.14X and 29.38X, respectively.

With a massive $253.6 billion market cap, AXP enjoys significant network effects and a global reach that few can rival. The company is benefiting from its premium customer base, robust fee income and a closed-loop network that allows for better control over relationships with both cardholders and merchants. In the third quarter of 2025, it delivered an ROE of 35.9%, up from 33.9% a year ago.

Price Performance Check

Over the past three months, AmEx shares have risen 12.8%, outperforming the industry’s 8.5% decline, the Finance sector’s 1.7% rise and the S&P 500’s 6.8% gain. Among peers, Mastercard has declined 5.3%, while Visa has dropped 4% during the same timeframe.

Three-Month Price Performance – AXP, MA, V, Industry, Sector & S&P 500

Tailwinds for AmEx Stock

AmEx's success is driven by its loyal customer base, strong card acquisitions and high retention rates. Travel and lifestyle continue to be the strongest driving forces for the company. It taps into its long-standing connections with luxury hotels, airlines and experience providers to secure upgrades, exclusive rates and perks. This unique ecosystem sets it apart, especially for Platinum and Centurion cardholders who are looking for tailored service.

AmEx is increasingly leveraging AI, machine learning, fraud detection and personalized offers to enhance customer experience and optimize operations. These initiatives, combined with strong execution across business segments, help the company support revenue growth. In the third quarter of 2025, its total revenues net of interest expense rose 11% year over year, along with 9% growth in network volumes. AXP expects 2025 revenues to rise 9-10% from the 2024 base of $65.9 billion. Additionally, American Express Cards are accepted at around 160 million merchant locations around the world. Since 2017, the number of places accepting AmEx has skyrocketed by nearly 5X.

With younger customers, particularly Gen Z and Millennials, AmEx is discovering a significant growth opportunity. Once thought to be skeptical of traditional credit, these groups are now among the fastest-growing consumers of AXP's high-end, digital-first products. In the third quarter of 2025, U.S. Consumer Services billed business rose 9% year over year, supported by strong Millennial and Gen Z spending.

Shareholder-Friendly Moves

AmEx’s strong cash position enables the company to take shareholder-friendly moves. As of Sept. 30, 2025, it had $54.7 billion in cash and cash equivalents and generated $15.4 billion from operating cash flow in the first nine months of 2025, which soared 85.7% year over year. In the last reported quarter, the company returned $2.9 billion to its shareholders through buybacks and dividends. Last year, it returned $7.9 billion to its shareholders. Also, earlier this year, it raised its quarterly dividend by 17%.

AmEx’s Estimates Move in the Right Direction

The Zacks Consensus Estimate now indicates 2025 earnings growth of 15.6%, followed by another 13.7% rise in 2026. Revenue estimates for those years point to expansions of 9.3% and 8.3%, respectively, signaling broad-based momentum. The company beat earnings estimates in each of the past four quarters, with an average surprise of 4%.

American Express Company Price, Consensus and EPS Surprise

American Express Company price-consensus-eps-surprise-chart | American Express Company Quote

AXP’s Risks to Watch

Expenses continue to climb due to increased spending on rewards, services, marketing and business development, as the company focuses more on growth, brand visibility, customer engagement, retention and digital expansion. Total expenses rose 10% in 2023 and 6% in 2024, followed by a 10% year-over-year increase in the third quarter of 2025. As of Sept. 30, 2025, AmEx carried $59.2 billion in debt. Its long-term debt to capital of 64.1% is much higher than the industry average of 43.6%. Moreover, the company is often seen as less agile when it comes to capitalizing on new non-card payment technologies.

Final Verdict on AXP Stock

AmEx remains a high-quality financial services company with strong brand equity, premium customer loyalty and solid earnings momentum. The company is executing well across segments, supported by rising volumes, travel demand and disciplined capital returns. However, elevated valuation versus historical norms, rising expense pressures and higher leverage temper near-term upside. With estimates trending positive but balanced with risks, AXP appears fairly valued at current levels. AmEx currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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