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Is AmEx Stock a Buy After Q3 Earnings Beat? Premium Appeal Shines
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Key Takeaways
American Express beat Q3 EPS estimates by 4.7% and raised its 2026 adjusted EPS outlook to $17.60-$17.90.
Net card fees jumped 16% to $2.97 billion as 76% of 3.1 million new cards went to fee-paying accounts.
Member services costs surged 36%, while commercial billings rose just 3%, challenging profit growth.
American Express Company (AXP - Free Report) delivered an earnings beat in the third quarter of 2026 and raised its full-year profit outlook. Yet the stock has declined approximately 3.8% from its pre-earnings closing price, as the bigger question for investors is not whether affluent customers are still spending; it is whether AmEx can turn that spending into faster, repeatable earnings growth while funding richer card benefits and defending its premium position. Moreover, third-quarter network volumes, total interest income and revenues missed their respective consensus estimates.
Nevertheless, the results offer reasons for confidence while also highlighting why investors should carefully assess the stock before buying.
What Did AmEx Actually Deliver?
Adjusted earnings reached $4.68 per share, up 13% year over year and 4.7% above the Zacks Consensus Estimate. Revenues, net of interest expense, rose 9% to $20.06 billion but came in slightly below the $20.13 billion consensus. Billed business advanced 8% to $454 billion.
Other operating metrics presented a mixed picture. Network volumes grew 8% year over year to $517.9 billion on the back of higher U.S. consumer spending. However, the metric fell short of the Zacks Consensus Estimate of $520.5 billion. Total interest income of $6.9 billion also rose 4% year over year but missed the consensus mark of $7 billion.
Its solid capital position also supported shareholder returns. AmEx repurchased $1.6 billion of shares and distributed $600 million in dividends during the quarter, ending September with a 10.9% common equity Tier 1 ratio.
The most convincing signal was the willingness of customers to pay for AmEx membership. Net card fees increased 16% on a reported basis to $2.97 billion, or 17% after adjusting for currency changes. Growth accelerated from 15% in the preceding quarter on that currency-adjusted measure. Of the 3.1 million new cards acquired, 76% were attached to fee-paying accounts. These customers provide a relatively dependable revenue stream beyond transaction volumes.
The U.S. Platinum refresh also appears to be holding its appeal. Management reported 99% spending retention for that portfolio one year after the refresh. The challenge now lies in sustaining member engagement without allowing rising benefit costs to erode incremental revenues.
Spending trends support that argument. U.S. consumer billings grew 9.4%, while international spending rose 11%. Travel and entertainment spending increased 10%, including 13% airline growth and 9% restaurant growth. The resilience of these discretionary categories suggests AmEx's customer base remains better positioned than the average consumer to withstand economic uncertainty.
Lending added another source of growth. Card balances and other loans rose 8% to $233.15 billion. Importantly, the principal-only net write-off rate eased to 1.8% from 1.9% a year earlier. Credit-loss provisions fell to $985 million from $1.29 billion, although the latest figure included a $211 million reserve release linked to updated models.
Concerns Investors Should Not Ignore
The first is the price of keeping premium customers happy. Total expenses rose 9% to $14.55 billion, matching revenue growth. Card Member services costs jumped 36%, while marketing spending increased 11%. Variable customer engagement expenses consumed 44.3% of revenue. This is the trade-off behind premium membership: more card fees and spending also mean bigger bills for benefits, rewards and customer acquisition. Management expects engagement-cost growth to moderate as it laps last year's Platinum refresh.
The second is competition, particularly where AmEx has less momentum. Commercial billed business increased only 3%, or 5% excluding small-business co-brand portfolio exits. Management acknowledged weaker execution in the middle market, where fintech providers such as Ramp and Brex have sharpened expectations for automated expense management. AmEx is responding with new corporate cards, software and its Center acquisition, but gains will take time. Meanwhile, Chase, Capital One and Citi continue fighting for affluent consumers. More generous perks could raise the cost of winning business even if overall spending stays firm.
AmEx’s Valuation
AmEx trades at a forward P/E of 15.84X, below its five-year median of 16.88X but above the industry average of 14.42X. Nevertheless, it remains below peers Visa Inc.’s (V - Free Report) 26.55X and Mastercard Incorporated’s (MA - Free Report) 27.20X multiples, partly reflecting greater direct exposure to lending and credit risks.
Image Source: Zacks Investment Research
AmEx’s Guidance Improves, and Estimates Agree
American Express now expects 2026 adjusted earnings of $17.60-$17.90 per share. The company retained its 10% revenue growth target. Management also aims to sustain mid-teens earnings growth over time. Continuing card fee momentum, steady lending income and slower growth in benefit expenses could support that ambition.
The Zacks Consensus Estimate for 2026 bottom line is pegged at $17.69, signaling 15% year-over-year growth, while the consensus mark for 2027 EPS signals a further 14.2% increase. Meanwhile, the consensus estimate for 2026 revenues of $79.48 billion indicates a 10% increase, followed by another 8.7% growth in 2027.
AmEx beat earnings estimates three times in the past four quarters and missed once, with the average surprise being 3.3%.
Over the year-to-date period, AXP shares have declined 15.4%, while the broader industry fell 16.6%. In contrast, Visa and Mastercard have posted growth of 14.6% and 6.8%, respectively, while the S&P 500 Index increased 11.3%.
The stock now remains about 19.2% below its 52-week high of $387.49. It is trading below the Wall Street average price target of $371, implying around 18.6% upside from current levels.
Final Words
American Express’ 2026 earnings outlook reflects the strength of its premium-card franchise, supported by robust fee growth, resilient customer spending and sound credit quality. However, the earnings beat was accompanied by revenue, interest income and network volume misses. Rising service costs and sluggish commercial billings further highlight the challenges of sustaining profitability amid intensifying competition.
Although the recent share-price decline has made the stock’s valuation more attractive, these headwinds warrant a measured approach. Existing shareholders may consider holding their positions as management works to improve cost efficiency and strengthen commercial growth. However, new investors may prefer to wait for clearer evidence of improving operating leverage before initiating positions. AXP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Is AmEx Stock a Buy After Q3 Earnings Beat? Premium Appeal Shines
Key Takeaways
American Express Company (AXP - Free Report) delivered an earnings beat in the third quarter of 2026 and raised its full-year profit outlook. Yet the stock has declined approximately 3.8% from its pre-earnings closing price, as the bigger question for investors is not whether affluent customers are still spending; it is whether AmEx can turn that spending into faster, repeatable earnings growth while funding richer card benefits and defending its premium position. Moreover, third-quarter network volumes, total interest income and revenues missed their respective consensus estimates.
Nevertheless, the results offer reasons for confidence while also highlighting why investors should carefully assess the stock before buying.
What Did AmEx Actually Deliver?
Adjusted earnings reached $4.68 per share, up 13% year over year and 4.7% above the Zacks Consensus Estimate. Revenues, net of interest expense, rose 9% to $20.06 billion but came in slightly below the $20.13 billion consensus. Billed business advanced 8% to $454 billion.
Other operating metrics presented a mixed picture. Network volumes grew 8% year over year to $517.9 billion on the back of higher U.S. consumer spending. However, the metric fell short of the Zacks Consensus Estimate of $520.5 billion. Total interest income of $6.9 billion also rose 4% year over year but missed the consensus mark of $7 billion.
Its solid capital position also supported shareholder returns. AmEx repurchased $1.6 billion of shares and distributed $600 million in dividends during the quarter, ending September with a 10.9% common equity Tier 1 ratio.
For a detailed analysis, read our blog American Express Q3 Earnings Beat Estimates on Strong Card Fees.
Premium Customers Remain the Growth Engine
The most convincing signal was the willingness of customers to pay for AmEx membership. Net card fees increased 16% on a reported basis to $2.97 billion, or 17% after adjusting for currency changes. Growth accelerated from 15% in the preceding quarter on that currency-adjusted measure. Of the 3.1 million new cards acquired, 76% were attached to fee-paying accounts. These customers provide a relatively dependable revenue stream beyond transaction volumes.
The U.S. Platinum refresh also appears to be holding its appeal. Management reported 99% spending retention for that portfolio one year after the refresh. The challenge now lies in sustaining member engagement without allowing rising benefit costs to erode incremental revenues.
Spending trends support that argument. U.S. consumer billings grew 9.4%, while international spending rose 11%. Travel and entertainment spending increased 10%, including 13% airline growth and 9% restaurant growth. The resilience of these discretionary categories suggests AmEx's customer base remains better positioned than the average consumer to withstand economic uncertainty.
Lending added another source of growth. Card balances and other loans rose 8% to $233.15 billion. Importantly, the principal-only net write-off rate eased to 1.8% from 1.9% a year earlier. Credit-loss provisions fell to $985 million from $1.29 billion, although the latest figure included a $211 million reserve release linked to updated models.
Concerns Investors Should Not Ignore
The first is the price of keeping premium customers happy. Total expenses rose 9% to $14.55 billion, matching revenue growth. Card Member services costs jumped 36%, while marketing spending increased 11%. Variable customer engagement expenses consumed 44.3% of revenue. This is the trade-off behind premium membership: more card fees and spending also mean bigger bills for benefits, rewards and customer acquisition. Management expects engagement-cost growth to moderate as it laps last year's Platinum refresh.
The second is competition, particularly where AmEx has less momentum. Commercial billed business increased only 3%, or 5% excluding small-business co-brand portfolio exits. Management acknowledged weaker execution in the middle market, where fintech providers such as Ramp and Brex have sharpened expectations for automated expense management. AmEx is responding with new corporate cards, software and its Center acquisition, but gains will take time. Meanwhile, Chase, Capital One and Citi continue fighting for affluent consumers. More generous perks could raise the cost of winning business even if overall spending stays firm.
AmEx’s Valuation
AmEx trades at a forward P/E of 15.84X, below its five-year median of 16.88X but above the industry average of 14.42X. Nevertheless, it remains below peers Visa Inc.’s (V - Free Report) 26.55X and Mastercard Incorporated’s (MA - Free Report) 27.20X multiples, partly reflecting greater direct exposure to lending and credit risks.
AmEx’s Guidance Improves, and Estimates Agree
American Express now expects 2026 adjusted earnings of $17.60-$17.90 per share. The company retained its 10% revenue growth target. Management also aims to sustain mid-teens earnings growth over time. Continuing card fee momentum, steady lending income and slower growth in benefit expenses could support that ambition.
The Zacks Consensus Estimate for 2026 bottom line is pegged at $17.69, signaling 15% year-over-year growth, while the consensus mark for 2027 EPS signals a further 14.2% increase. Meanwhile, the consensus estimate for 2026 revenues of $79.48 billion indicates a 10% increase, followed by another 8.7% growth in 2027.
AmEx beat earnings estimates three times in the past four quarters and missed once, with the average surprise being 3.3%.
American Express Price and EPS Surprise
American Express Company price-eps-surprise | American Express Company Quote
Share Price Performance
Over the year-to-date period, AXP shares have declined 15.4%, while the broader industry fell 16.6%. In contrast, Visa and Mastercard have posted growth of 14.6% and 6.8%, respectively, while the S&P 500 Index increased 11.3%.
YTD Price Performance – AXP, V, MA, Industry & S&P 500
The stock now remains about 19.2% below its 52-week high of $387.49. It is trading below the Wall Street average price target of $371, implying around 18.6% upside from current levels.
Final Words
American Express’ 2026 earnings outlook reflects the strength of its premium-card franchise, supported by robust fee growth, resilient customer spending and sound credit quality. However, the earnings beat was accompanied by revenue, interest income and network volume misses. Rising service costs and sluggish commercial billings further highlight the challenges of sustaining profitability amid intensifying competition.
Although the recent share-price decline has made the stock’s valuation more attractive, these headwinds warrant a measured approach. Existing shareholders may consider holding their positions as management works to improve cost efficiency and strengthen commercial growth. However, new investors may prefer to wait for clearer evidence of improving operating leverage before initiating positions. AXP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.