AmEx Flexes Premium Muscle in Q1: But Can it Outrun Tariff Headwinds?

American Express Company AXP, the global integrated payments giant, reaffirmed its full-year 2025 revenue and profit guidance as its affluent customer base continues to spend freely, seemingly unfazed by ongoing tariff-related uncertainty. While many U.S. consumers are feeling the strain of macroeconomic turbulence, AmEx’s premium-focused clientele remains willing to pay for the perks and rewards that come with its high-end credit cards.But just how resilient are these high-net-worth customers in the face of a prolonged economic downturn? Let’s first dive into the company’s first-quarter 2025 results to get a clearer picture.AmEx’s Q1 2025: Key HighlightsEPS: $3.64, beating estimates by 5.5% and up 9% YoY.Network volumes: $439.6 billion, up 5% YoY.U.S. Consumer Services: Pre-tax income of $1.7 billion rose 7% YoY.Commercial Services: Pre-tax income of $836 million declined 5% YoY.With overall momentum on its side, AmEx remains confident in its growth trajectory.Revenue Guidance (2025): Reaffirmed at 8–10% growth from $65.9 billion in 2024.EPS Guidance (2025): Reaffirmed at $15–$15.50, up from $13.35 in 2024.See the full 1Q25 earnings discussion here.AmEx’s Favorable Estimates & Surprise HistoryThe Zacks Consensus Estimate for AmEx’s 2025 earnings indicates a 13.9% year-over-year increase, while 2026 earnings are expected to grow 14.5%. Revenue estimates for 2025 and 2026 indicate year-over-year growth of 8.5% and 8.4%, respectively.(See the Zacks Earnings Calendar to stay ahead of market-making news.)AXP has a solid track record of surpassing earnings expectations, delivering an average surprise of 5.2% over the past four quarters.American Express Company Price and EPS Surprise American Express Company price-eps-surprise | American Express Company QuoteAmEx’s Price PerformanceOver the past month, AXP shares have declined 9.1%, in line with the broader industry downturn. However, the stock still managed to outperform both the industry average and the S&P 500 Index. Meanwhile, competitors like Visa Inc. V and Mastercard Incorporated MA saw smaller declines, as they are less exposed to credit risk compared to AmEx.One-Month Price Performance – AXP, V, MA, Industry & S&P 500 Image Source: Zacks Investment ResearchAmEx’s Valuation Reflects Investor ConfidenceAmerican Express is trading at a forward P/E ratio of 15.84X, above the industry average of 13.98X, signaling strong investor confidence. While that’s a premium compared to peers, Visa and Mastercard trade at significantly higher multiples — 27.39X and 31.51X, respectively — due to their different business models and risk profiles. Image Source: Zacks Investment ResearchCan AmEx Navigate the Headwinds?American Express continues to stand out by leveraging its unique position as both a credit card issuer and a network operator. This dual role allows it to capture a larger share of transaction economics compared to rivals, contributing to a more profitable and resilient business model, one that even Warren Buffett has backed for decades. Strong credit performance and operational efficiency remain core drivers of its profitability, while rising cardmember spending and expanding lending operations help anchor stability in a shifting economic environment.That said, this model does expose AmEx to credit risk, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. However, a 9% year-over-year decline in its first quarter provision for credit losses to $1.2 billion suggests improving credit quality and reduced expectations for customer defaults.While macroeconomic uncertainty may still weigh on billed business and revenue growth, AmEx is showing resilience. Travel and entertainment (T&E) spending remains strong, particularly in lodging, dining, and entertainment, areas where AmEx has doubled down. Its acquisition of Center enhances its footprint in high-end dining and lifestyle experiences, reinforcing its premium value proposition even amid current volatility.AmEx is also investing in its future customer base, targeting Gen Z and Millennials through focused marketing efforts. Though these groups currently spend less, the long-term strategy is to build brand loyalty early and grow with them over time.Financially, AmEx is on solid footing. It ended the first quarter of 2025 with $52.5 billion in cash and cash equivalents, up from $40.6 billion at the end of 2024. Short-term debt stood at $1.6 billion. The company also returned value to shareholders by repurchasing 2 million shares for $700 million and paying $600 million in dividends during the quarter.How to Play AmEx Stock Now?American Express continues to demonstrate strength through its premium client base, solid financials, and strategic investments in travel, dining and younger demographics. Its improving rainy day fund metrics and resilient T&E spending are clear positives, even as macroeconomic headwinds and tariff uncertainties linger. While long-term fundamentals remain attractive, near-term pressures could limit upside potential. Given the current environment, AXP looks well-positioned — but not without risks — making it a prudent hold at this stage.AmEx currently has a Zacks Rank #3 (Hold), indicating a neutral outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks