American Express Company
Financials · Consumer Finance
STRUCTURAL: Closed-loop network is a moat - $V/$MA see only interchange, AXP sees issuer spread + network fee + annual fee + data. Premium positioning insulates billed business from credit cycle (high-FICO base, fee-paying customers). Millennial/Gen Z now ~35% of new Platinum/Gold acquisitions - refresh of the franchise is real, not a marketing line.
- Billed business compounding low-double-digits, fee revenue growing faster than spend
- Premium card refresh cycle (Platinum repriced upward, lounge build-out) defends pricing power
- Net interest income tailwind on revolving balances without subprime drift (FICO 750+ skew)
- Buyback + dividend; ~20% ROE through cycle
- International card services under-penetrated vs US run-rate
- Premium card category increasingly crowded - $JPM Sapphire Reserve repricing, Citi Strata, Capital One Venture X
- Credit normalization: loss rates rising off 2022 trough, reserve build pressures EPS
- Discount-fee compression risk if regulators revisit merchant routing rules ($V/$MA precedent)
- Travel/dining-skewed billed business is cyclical - recession would dent the spend line that justifies premium fees
- Stock at ~18x fwd P/E is no longer a value re-rate story; multiple expansion is done
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