AmEx's Q4 Earnings Miss Isn't the Whole Story: Should You Buy or Sell?

American Express Company AXP, the global integrated payments leader, saw its shares climb 1.3% following the release of fourth-quarter 2025 results, even though earnings narrowly missed expectations. Investors appeared encouraged by strong customer engagement and resilient premium spending, which together reinforced confidence in the company’s long-term strategy.

While macroeconomic headwinds pressure discretionary spending, AmEx’s affluent customer base remains remarkably resilient. Rising revolving loan balances, steady growth in card fees and sustained momentum in Card Member spending helped offset the earnings shortfall and elevated customer engagement and operating cost levels.

This premium positioning also helps insulate AmEx from potential political and regulatory pressures. President Donald Trump’s proposal to cap credit-card interest rates at 10% for one year could pose challenges for mass-market lenders, but its impact on AmEx is expected to be relatively muted.

AmEx’s Q4 2025: Key Highlights

For the fourth quarter of 2025, American Express reported earnings per share (EPS) of $3.53, missing the Zacks Consensus Estimate by a marginal 0.3%. However, earnings still rose 16% year over year, reflecting operating leverage and strong spending trends. Total revenues, net of interest expense, climbed 10% year over year to $19 billion, exceeding consensus estimates by 0.8%. For a detailed analysis, read our blog here.

Segment-wise performance was mixed. U.S. Consumer Services segment’s pre-tax income reached $1.6 billion, up 0.3% year over year, though it fell short of the Zacks Consensus Estimate by 5.3%. The Global Merchant and Network Services segment’s pre-tax net income of $884 million increased 4% year over year but missed the consensus estimate of $1.1 billion.

Commercial Services delivered a standout performance, with pre-tax income climbing 3% to $837 million, beating the estimate of $758.1 million. International Card Services posted a sharp turnaround, with pre-tax income surging to $316 million from just $34 million a year ago and beating the consensus mark of $274.9 million.

AmEx’s Outlook vs. Estimates

American Express projects 2026 revenues to increase between 9% and 10% from the 2025 level of $72.2 billion, while the Zacks Consensus Estimate indicates a 9% increase, followed by another 7.9% growth in 2027. Management expects 2026 EPS in the range of $17.30-$17.90, the midpoint of which indicates an improvement of 14.4% from the 2025 level of $15.38, while the Zacks Consensus Estimate is pegged at $17.51. The consensus mark for 2027 EPS signals 14.7% growth.

AmEx beat earnings estimates thrice in the past four quarters and missed once, the average surprise being 3.9%.

American Express Company Price, Consensus and EPS Surprise

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

Share Price Performance: Outpacing Peers & the Market

Over the past year, AXP shares have gained 17.3%, comfortably outperforming both the broader industry and the S&P 500. In contrast, competitors Visa Inc. V and Mastercard Incorporated MA posted declines of 6.5% and 4.3%, respectively.

Price Performance – AXP, V, MA, Industry & S&P 500

Following this run, AXP currently trades about 6.3% below its 52-week high of $387.49. The stock currently trades below the Wall Street average price target of $375.22, suggesting a modest 3.3% upside from current levels.

AmEx’s Valuation

American Express trades at a forward P/E of 20.4X, above its five-year median of 17.3X and the industry average of 11.3X. While this suggests some valuation premium, it remains below Visa’s 24.4X and Mastercard’s 27.5X multiples, reflecting differences in business models and risk exposure.

What’s Driving AmEx?

American Express continues to differentiate itself through its integrated payments model, operating as both a card issuer and a network operator. This vertically integrated structure allows the company to capture a significantly larger share of transaction economics compared to peers, translating into superior revenue generation, margins and deeper customer relationships. By controlling the entire value chain, from card issuance and merchant acquisition to transaction processing and rewards, AmEx gains valuable data insights, enhances personalization and builds an ecosystem that reinforces long-term spending engagement.

While this model exposes AmEx more directly to credit risk than pure-play networks, the company’s underwriting discipline and premium customer focus continue to support credit quality. Provision for credit losses increased just 1% year over year to $5.3 billion in 2025, signaling stable borrower behavior despite elevated interest rates and inflationary pressures. This reflects AmEx’s selective acquisition strategy, conservative risk management framework, and strong historical performance in navigating economic cycles without compromising asset quality.

AmEx is also investing aggressively in building its future customer base by targeting affluent, experience-driven Gen Z and Millennial consumers. These younger cohorts exhibit high spending intensity, strong engagement with lifestyle and travel rewards, and improving income profiles, positioning them as long-duration revenue drivers. By onboarding high-quality customers early in their financial lifecycle, AmEx aims to cultivate sustained profitability through their peak earning years.

Financially, AmEx is on a solid footing. The company ended 2025 with $47.8 billion in cash and cash equivalents, up sharply from the prior year, providing ample flexibility to invest in growth, absorb macro volatility and return capital to shareholders. During the year, AmEx deployed $5.3 billion toward share repurchases and distributed $2.3 billion in dividends.

How to Play AmEx Stock Now?

Overall, American Express remains a high-quality franchise, supported by resilient premium spending, disciplined credit management and a strong balance sheet. Its integrated payments model, affluent customer base and long-term growth strategy continue to drive stable earnings visibility despite macro and regulatory uncertainties. However, with the stock trading at a valuation premium and near average price target, near-term upside appears limited. AXP currently carries a Zacks Rank #3 (Hold), suggesting investors may await a more attractive entry point.

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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