While the market chases hype stocks, AXP quietly delivers record profits, high margins, and rising free cash flow — all at a valuation that value investors dream of.
At $383, American Express might just be one of the most underpriced quality cash-flow giants in the S&P 500.
Consolidated Financial Performance (2023 – 2025)
| Metric | 2023 | 2024 | 2025 | Change |
|---|---|---|---|---|
| Revenue ($M) | 67,373 | 74,188 | 78,650 | +17% |
| Operating Income ($M) | 12,677 | 15,043 | 16,200 | +28% |
| Net Income ($M) | 8,252 | 9,995 | 10,411 | +26% |
| EPS (Diluted) | $11.21 | $14.02 | $14.89 | +33% |
| Free Cash Flow ($M) | 16,989 | 12,133 | 18,938 | +11% vs 2023 |
- AXP continues to grow revenue and EPS steadily in a highly regulated environment.
- A dip in FCF in 2024 is reversed strongly in TTM 2025 → cash engine is intact.
Margins: Stability of a Best-in-Class Financial Stock
| Margin Type | 2023 | 2024 | 2025 | Notes |
|---|---|---|---|---|
| Gross Margin (%) | 61.6 | 61.2 | 61.0 | Very consistent |
| Operating Margin (%) | 18.8 | 20.3 | 20.6 | Slight improvement |
| Net Margin (%) | 12.3 | 13.5 | 13.2 | Margin expansion sustained |
📌 Conclusion:
AXP offers high, steady margins for a legacy financial institution, even during inflationary pressures and rising rates.
Cash Flow & Capital Allocation
| Metric | 2023 | 2024 | 2025 | Commentary |
|---|---|---|---|---|
| Free Cash Flow (FCF) ($M) | 16,989 | 12,133 | 18,938 | Strong FCF comeback |
| CapEx ($M) | -1,565 | -1,917 | -2,201 | Stable investments |
| Dividends Paid ($M) | -1,780 | -1,999 | -2,198 | Consistent growth |
| Share Buybacks ($M) | -3,650 | -6,020 | -5,946 | Aggressive capital returns |
| Net Cash Change ($M) | +12,682 | -5,956 | +6,788 | Highly positive TTM cash growth |
- Strong FCF powers both dividends and share repurchases.
- Despite volatility in 2024, 2025 is a return to strength.
Valuation: Still a Bargain?
| Valuation Metric | 2023 | 2024 | TTM 2025 | Comment |
|---|---|---|---|---|
| P/E Ratio | 21.9x | 25.7x | 25.7x | Fair for a stable grower |
| Price / Sales | 2.05x | 2.85x | 2.93x | Increasing but acceptable |
| Price / Free Cash Flow | 9.07x | 20.88x | 13.75x | Attractive long-term level |
AXP trades at one of the lowest P/FCF multiples among mega-cap financials, while still growing.
Price Target Scenarios
| Time Horizon | Price Target ($) | Scenario | Upside vs $383 |
|---|---|---|---|
| Q2 2025 | $370 – $375 | Technical pullback | -2% to -4% |
| End of 2025 | $400 – $420 | Earnings growth + FCF upside | +4% to +10% |
| 2026 – 2027 | $450 – $480 | Macro soft landing + rerating | +17% to +25% |
Key Risks
| Risk | Level | Comment |
|---|---|---|
| Consumer defaults | Medium | Watch closely in downturns |
| High interest rate persistence | Medium | May affect card spending |
| Fintech & neobank competition | Medium | Still manageable |
| Regulatory pressure | Classic | Always present in financials |
Final Verdict & Recommendation
| Factor | Assessment |
|---|---|
| Revenue & EPS Growth | Steady and reliable |
| Margins | High and consistent |
| Free Cash Flow | Very strong |
| Valuation | Undervalued |
| Shareholder Returns | Strong buybacks + growing divs |
| Long-Term Potential | Solid and secure |
Final Verdict: HOLD / BUY on pullback to $360–370
AXP combines quality, growth, cash flow, and capital discipline — a rare combo at this price.
- Perfect for long-term portfolios seeking stability + returns.
- Ideal buy zone below $370 on weakness.
- Long-term price potential up to $480+ in 2026–27.
Disclaimer :
This content is for informational purposes only and does not constitute investment advice. All investments carry risk, including the loss of capital. Conduct your own research before making any decision.
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