Is the Market Underrating American Express's Growth Runway?
2026-08-06 15:30
•Dave Kovaleski •The Motley Fool
•••• ••••• Axe Cap view
American Express: Underrated Growth in a Crowded Payments Space
Despite a weak run this year, American Express is showing earnings strength and a clear growth path that markets might be missing.
American Express is often overshadowed by Visa and Mastercard, yet its recent Q2 results tell a different story. With revenue up 10% year-on-year and earnings per share beating expectations, it’s clear AXP is investing wisely in customer acquisition, even if that means higher short-term expenses. The management’s confidence in raising revenue guidance to 10% and forecasting 14% EPS growth through 2026 suggests they see durable tailwinds ahead. Trading around 20 times earnings, it’s not a screaming bargain but offers a reasonably priced entry into a niche, premium credit ecosystem. For South African investors, the USD/ZAR exchange rate matters when assessing returns, as a weaker rand would amplify dollar exposure benefits. Risks include unexpected macro shocks that could impact consumer spending or tighten credit conditions, which would pressure AXP’s growth. Still, the market’s lukewarm reception feels like a buying opportunity. this is just our opinion and not financial advice
We would watch American Express closely and consider a buy on dips, especially for exposure to quality US consumption plays via currency diversification. Trim positions if USD/ZAR weakens sharply or credit costs rise unexpectedly.
- AXP
- USD/ZAR
- US consumer slowdown
- Rand volatility impacting dollar returns
6/10
American Express stock has underperformed its competitors and major indexes this year, down 6% YTD while Visa is up 6% and Mastercard is flat. However, the article argues the stock may be underrated based on strong Q2 earnings (revenue +10% YoY, EPS beat), raised revenue guidance to 10% growth, and projected 14% earnings growth for 2026. Concerns about higher operating expenses are offset by CEO commentary on necessary investments in customer acquisition and long-term growth. Trading at 20x earnings with a long growth runway, American Express is positioned as an underrated buy.
Our take is based on reporting first published by The Motley Fool.