How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in American Express (
AXP Quick Quote AXP - Free Report) ten years ago? It may not have been easy to hold on to AXP for all that time, but if you did, how much would your investment be worth today? American Express' Business In-Depth
With that in mind, let's take a look at American Express' main business drivers.
Founded in 1850, NY-based American Express Company is a diversified financial services company, offering charge and credit payment card products, and travel-related services worldwide. American Express and its main subsidiary – American Express Travel Related Services Company, Inc. (“TRS”) – are bank holding companies under the Bank Holding Company Act of 1956. The company offers business travel-related services through its non-consolidated joint venture, American Express Global Business Travel (the GBT JV).
The company’s range of products and services include charge card, credit card and other payment and financing products; Merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants; Network services; other fee services, including fraud prevention services and the design and operation of customer loyalty programs; Expense management products and services and Travel-related services.
The company’s reporting segments are as follows:
Global Consumer Services Group (GCSG), (58% of 2020 total net revenues) including proprietary consumer cards globally, consumer services including travel services and non-card financing products, certain international joint ventures and the company’s partnership agreements in China;
Global Commercial Services (GCS), (29%) offers a wide range of card and payment programs, expense management tools, consulting services, business financing and cross-border payments solutions to small businesses, mid-size companies and large corporations around the world.
Global Merchant and Network Services (GMNS), (13%) operate a global payments network that processes and settles card transactions, acquires merchants and provides fraud-prevention tools, marketing solutions, data analytics and other programs and services to merchants that leverage the capabilities of the company’s integrated network. Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in American Express ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in May 2011 would be worth $3,099.14, or a gain of 209.91%, as of May 12, 2021, and this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 209.38% and the price of gold went up 17.43% over the same time frame.
Analysts are forecasting more upside for AXP too.
American Express’ earnings of $1.74 per share beat the Zacks Consensus Estimate by 3.6% on the back of lower expenses, but was down 12.1% year over year due to muted revenues. Shares have outperformed the industry in a year's time. Its strategic initiatives bode well to recover from the bleak market. The company regulated its expense base while selectively investing in the areas crucial for long-term strategies. Maintenance of sufficient capital will boost business. Decline in card-member services due to less usage of travel-related benefits following COVID-imposed travel restrictions aid margins. As billed business and travel are likely to stay at low levels, the decline in business is likely to persist. Its drained profitability and stressed revenues might persist due to the uncertain environment.
The stock is up 5.78% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 9 higher, for fiscal 2021. The consensus estimate has moved up as well.