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AmEx (AXP) Scales 52 Week High, Further Upside Potential Left?
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The stock of American Express Co. (AXP - Free Report) hit a 52-week high of $168.58 before settling at $168.21. The company is gaining from an improving business climate, reopening of economy and an improved consumer confidence, which spurred spending.
Over the past year, the stock has gained 80% compared with the industry's growth of 12.7% and easily surpassing the respective rise of 29.5% and 24.8% in Mastercard Inc. (MA - Free Report) and Visa Inc. (V - Free Report) with which it shares space in the payments industry. Discover Financial Services (DFS - Free Report) , has gained 148% over the same time period.
Image Source: Zacks Investment Research
Is There More Room for the Stock to Run?
The year 2021 is a transition phase for AmEx after the company suffered constrained consumer spending in 2020. The company took a hit from revenue declines last year when its products including credit and charge cards, personal loans, business loans and working capital loans showed no takers as consumers constrained their budgets and many businesses were shut down.
A large chunk of AmEx’s customers consists of small businesses, which was worst hit by the pandemic. Now that things are looking up and the small businesses are getting back on track , the company’s products are likely to see a surge in demand. Moreover, it targets premium consumers who have the propensity to spend nearly thrice the capacity of the customers of its rival networks.
The company’s business is picking up, evident from a spurt in demand for new cards. In the first quarter of 2021, it issued two million new cards for the first time since the beginning of the pandemic.
The company is experiencing progress in four strategic areas, such as pending volumes returning to the pre-pandemic levels, customer additions, retention of current customers and growth in merchants. The green shoots started appearing in the first quarter when the company confirmed that the overall spending on AmEx cards improved sequentially from the last two quarters of 2020.
Particularly, its business that caters to U.S. consumers, and small and medium-sized enterprises did better than other businesses and also surpassed the March 2019 levels. It should be noted that bulk of AmEx customers represents small businesses.
At the start of this year, AmEx had made new offers for U.S. consumers, small businesses, cobrand card members and small merchants. These are going to pay off now in terms of business volume expansion. The company’s non-U.S. volume, which lagged a bit due to renewed lockdowns in certain countries, is likely to pick up soon.
Pent-up demand for travel is already being felt and will further gather momentum as the fear of coronavirus recedes. AmEx’s Platinum Travel Credit Card provides an array of unbeatable luxury travel experiences to attract travelers. The company also rolled out an exciting bunch of offers pertaining to hotels, flights and car rentals at the onset of 2021 to lure customers to use its travel cards. Thus, the usage of these cards now as travel demand unfolds will boost spending on AmEx cards.
Strong Capital to Aid Growth
The cherry on the cake is the company’s solid financial standing and flexibility. It resumed share repurchases in the first quarter and maintained capital ratios well above the targets. Recently, it paid out its dividend, keeping alive its consistency as a dividend payer. The tradition is sure to continue as the company’s cash flow is stable and its debt, manageable.
Bottomline
This stock will continue with its rally since there are no imminent hurdles. Improving economy, favorable consumer sentiments and a strong groundwork for long-term growth will be its constant key levers. Over the past 30 days, the stock has seen 2021 earnings estimate being revised 1.1% upward to $7.43 per share.
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Bigstock
AmEx (AXP) Scales 52 Week High, Further Upside Potential Left?
The stock of American Express Co. (AXP - Free Report) hit a 52-week high of $168.58 before settling at $168.21. The company is gaining from an improving business climate, reopening of economy and an improved consumer confidence, which spurred spending.
Over the past year, the stock has gained 80% compared with the industry's growth of 12.7% and easily surpassing the respective rise of 29.5% and 24.8% in Mastercard Inc. (MA - Free Report) and Visa Inc. (V - Free Report) with which it shares space in the payments industry. Discover Financial Services (DFS - Free Report) , has gained 148% over the same time period.
Is There More Room for the Stock to Run?
The year 2021 is a transition phase for AmEx after the company suffered constrained consumer spending in 2020. The company took a hit from revenue declines last year when its products including credit and charge cards, personal loans, business loans and working capital loans showed no takers as consumers constrained their budgets and many businesses were shut down.
A large chunk of AmEx’s customers consists of small businesses, which was worst hit by the pandemic. Now that things are looking up and the small businesses are getting back on track , the company’s products are likely to see a surge in demand. Moreover, it targets premium consumers who have the propensity to spend nearly thrice the capacity of the customers of its rival networks.
The company’s business is picking up, evident from a spurt in demand for new cards. In the first quarter of 2021, it issued two million new cards for the first time since the beginning of the pandemic.
The company is experiencing progress in four strategic areas, such as pending volumes returning to the pre-pandemic levels, customer additions, retention of current customers and growth in merchants.
The green shoots started appearing in the first quarter when the company confirmed that the overall spending on AmEx cards improved sequentially from the last two quarters of 2020.
Particularly, its business that caters to U.S. consumers, and small and medium-sized enterprises did better than other businesses and also surpassed the March 2019 levels. It should be noted that bulk of AmEx customers represents small businesses.
At the start of this year, AmEx had made new offers for U.S. consumers, small businesses, cobrand card members and small merchants. These are going to pay off now in terms of business volume expansion.
The company’s non-U.S. volume, which lagged a bit due to renewed lockdowns in certain countries, is likely to pick up soon.
Pent-up demand for travel is already being felt and will further gather momentum as the fear of coronavirus recedes. AmEx’s Platinum Travel Credit Card provides an array of unbeatable luxury travel experiences to attract travelers. The company also rolled out an exciting bunch of offers pertaining to hotels, flights and car rentals at the onset of 2021 to lure customers to use its travel cards. Thus, the usage of these cards now as travel demand unfolds will boost spending on AmEx cards.
Strong Capital to Aid Growth
The cherry on the cake is the company’s solid financial standing and flexibility. It resumed share repurchases in the first quarter and maintained capital ratios well above the targets. Recently, it paid out its dividend, keeping alive its consistency as a dividend payer. The tradition is sure to continue as the company’s cash flow is stable and its debt, manageable.
Bottomline
This stock will continue with its rally since there are no imminent hurdles. Improving economy, favorable consumer sentiments and a strong groundwork for long-term growth will be its constant key levers. Over the past 30 days, the stock has seen 2021 earnings estimate being revised 1.1% upward to $7.43 per share.
AmEx carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>