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American Express (AXP) Up 29% in a Year: More Room to Run?

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Shares of American Express Company (AXP - Free Report) have gained 29.3% in a year compared with the industry’s and Finance sector’s rally of 7.2% and 8.1%, respectively. The S&P 500 composite index has climbed 15% in the same time frame. With a market capitalization of $144.6 billion, the average volume of shares traded in the last three months was 4.5 million.

Rebound in travel and entertainment (T&E) business, several product launches, pursuing technology advancements and a sound financial position continue to drive American Express’ performance.

This currently Zacks Rank #3 (Hold) integrated payments company has an impressive surprise history of beating on earnings for straight five quarters.

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Can AXP Retain the Momentum?

Improved network volumes courtesy of the worldwide economic recovery from the adverse impacts of the COVID-19 pandemic is expected to benefit American Express’ discount revenue in the days ahead. Discount revenue has usually been the largest contributor to AXP’s revenue growth. With the easing of pandemic restrictions, people have somewhat gained confidence in traveling, thereby leading to increased T&E-related volumes. This, in turn, is going to benefit discount revenues of AXP.

For 2022, American Express expects revenues to witness growth in the range of 18-20%, which indicates an increase from the 17% growth reported in 2021. With the economy attaining a stable state over the long term, AXP remains keen on attaining more than 10% revenue growth and registering mid-teens EPS growth.

Meanwhile, American Express continues to roll out innovative card offerings and upgrade the existing ones to cater to the evolving needs of its Card Members. AXP continues to pursue a host of measures focused on technology advancements, the introduction of secured digital solutions and assisting businesses in regulating payments. These initiatives will continue to bolster its digital suite and global foothold.

American Express has its Buy Now, Pay Later (BNPL) solution Plan It in place, which will help the integrated payments company to boost its presence in the thriving BNPL space. In March 2022, the solution was extended to Delta Air Lines with the aim of making it easier for Card Members to make seamless payments while booking Delta flights.

American Express has a solid financial standing, backed by a strong cash balance and robust cash-generating abilities. It generated cash from operations worth $14.6 billion in 2021, which increased nearly three-fold year over year. A strong financial position enables AXP to undertake significant business investments and prudent capital deployment moves. In March 2022, management approved a hike of around 20% in the quarterly dividend. AXP’s leverage ratio improved in 2021.

American Express has a favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth curve and the most promising momentum.

Stocks to Consider

Some better-ranked stocks in the finance space are MVB Financial Corp. (MVBF - Free Report) , Oaktree Specialty Lending Corporation (OCSL - Free Report) and Primis Financial Corp. (FRST - Free Report) . While MVB Financial flaunts a Zacks Rank #1 (Strong Buy), Oaktree Specialty Lending and Primis Financial carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

MVB Financial delivered a trailing four-quarter earnings surprise of 73.73%, on average. The Zacks Consensus Estimate for MVBF’s 2022 earnings has moved north by 58.9% in the past 30 days. MVB Financial has a Momentum Score of B.

The bottom line of Oaktree Specialty Lending outpaced estimates in three of the last four quarters and met once, the average being 12.16%. The Zacks Consensus Estimate for OCSL’s 2022 earnings suggests an improvement of 6.3%, while the same for revenues suggests growth of 16.3% from the corresponding year-ago reported figures. The consensus mark for Oaktree Specialty Lending’s 2022 earnings has moved 1.5% north in the past 60 days.

Primis Financial delivered a trailing four-quarter earnings surprise of 27.81%, on average. The Zacks Consensus Estimate for FRST’s 2022 earnings has moved 2.9% north in the past 60 days. Primis Financial has a Value Score of B.

Shares of MVB Financial and Oaktree Specialty Lending have gained 26.3% and 19% and 3.7%, respectively, in the past year. Meanwhile, Primis Financial stock has lost 7.8% in the same time frame.