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Here's Why You Should Retain American Express (AXP) Stock

American Express Company AXP remains well-poised for growth, backed by sustained revenue growth prospects, innovative card offerings and digital solutions suite, collaborations and acquisitions as part of continuous growth initiatives, and a solid financial position.

Zacks Rank & Price Performance

American Express carries a Zacks Rank #3 (Hold) at present.

The stock has lost 14.6% year to date compared with the industry’s and the Finance sector’s decline of 20.2% and 17.4%, respectively. The S&P 500 index fell 20% in the said time frame.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Favorable Style Score

AXP is positioned well for progress, as evident from its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Impressive Earnings Surprise History

The bottom line of American Express outpaced estimates in each of the trailing four quarters, the average surprise being 33.27%. The stock has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction.

Solid Return on Equity

The ROE of AXP for the trailing 12 months is 33.4%, which is higher than the industry average of 22.6%. This reflects American Express’ efficiency in utilizing its shareholders’ funds.

Business Tailwinds

The top line of American Express continues to benefit from several growth initiatives involving product launches, upgradation of the existing ones and continuous collaborations with well-established organizations to develop its capabilities. A gradual economic recovery bodes well for AXP since rising consumer spending signals increased usage of American Express-branded cards, which in turn, might contribute significantly to its top-line growth in the days ahead.

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For 2022, AXP anticipates revenue growth to witness year-over-year improvement between 18% and 20% when compared with the 2019 level. Revenue growth of more than 10% is expected to be achieved by American Express in the long haul.

AXP actively pursues a strategy of boosting its presence in the premium consumer space through extending membership benefits best suited to the daily expenditure, borrowing, travel and lifestyle needs of consumers. Meanwhile, the integrated payments company resorts to rolling out cutting-edge products and features in the form of diversified card offerings coupled with financing, banking and payment solutions to sustain its strong footprint in the commercial payments space.

In order to keep pace with the ongoing digital trend, American Express is committed to devising enhanced digital features, solutions and services, entering more digital partnerships and pursuing targeted acquisitions. These initiatives are intended to bolster the digital suite of AXP.

American Express boasts of a strong balance sheet, evident from a growing cash balance. It also has sufficient cash to service its short-term debt obligations. Continuous debt repayment efforts have led to a decline in interest expenses. AXP has solid cash-generating abilities, enabling it to pursue significant business investments and tactical capital-deployment moves via share buybacks and dividend payments.

Key Picks

Some better-ranked stocks in the Finance space are Blackstone Inc. BX, Axos Financial, Inc. AX and Oaktree Specialty Lending Corporation OCSL. While Blackstone flaunts a Zacks Rank #1 (Strong Buy), Axos Financial and Oaktree Specialty Lending carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Blackstone has a trailing four-quarter earnings surprise of 27.82%, on average. The Zacks Consensus Estimate for BX’s 2022 earnings suggests an improvement of 19.7%, while the same for revenues suggests growth of 18.8% from the corresponding year-ago reported figures. Blackstone has a Growth Score of B.

The bottom line of Axos Financial outpaced estimates in each of the last four quarters, the average surprise being 9.39%. The Zacks Consensus Estimate for AX’s 2022 earnings suggests an improvement of 9.5%, while the same for revenues suggests growth of 9.8% from the corresponding year-ago reported figures. Axos Financial has a Value Score of B.

Oaktree Specialty Lending’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.63%. The Zacks Consensus Estimate for OCSL’s 2022 earnings suggests an improvement of 12.5%, while the same for revenues suggests growth of 21.5% from the corresponding year-ago reported figures. The consensus mark for Oaktree Specialty Lending’s 2022 earnings has moved 2.9% north in the past 60 days.

Shares of Blackstone, Axos Financial and Oaktree Specialty Lending have lost 27.3%, 34.5% and 10%, respectively, year to date.


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Blackstone Inc. (BX) : Free Stock Analysis Report
 
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AXOS FINANCIAL, INC (AX) : Free Stock Analysis Report
 
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