Mastercard vs. AmEx: Which Payments Giant Has More Room to Run?

Mastercard Incorporated MA and American Express Company AXP are two towering names in the global payments industry. While both operate in a similar space, their business models, customer bases, and growth strategies vary considerably. Mastercard thrives as a payment network facilitating transactions globally, whereas AmEx runs a loop model that issues cards and processes payments in-house.Despite macroeconomic headwinds, both MA (market cap $483.7 billion) and AXP ($174.1 billion) have remained resilient, driven by a continued global shift toward digital payments, international travel recovery and resilient consumer spending. With inflation cooling speed expected to slow down and interest rates expected to move accordingly, investors are keen to see which of these two powerhouses is better positioned for the road ahead.Let’s dive deep and closely compare the fundamentals of the two stocks to determine which stock is more attractive now.The Case for MastercardMastercard has consistently demonstrated strong revenue growth and operating leverage, benefiting from its asset-light model. As a payment processor, Mastercard doesn’t bear credit risk, unlike AmEx. This lean approach has allowed it to scale globally, particularly in emerging markets.Recent earnings have been robust, with Mastercard reporting double-digit growth in cross-border volumes and transaction processing revenues. Travel spending, a key growth lever, continues to recover, especially in international markets.Additionally, Mastercard is aggressively investing in fintech partnerships, AI integration, and boosting service offerings, like cybersecurity and data analytics, moves that are likely to expand its ecosystem well beyond card-based payments.MA’s strong cash position enables substantial share buybacks and dividend payouts and supports inorganic growth and financial stability. With $8.44 billion in cash and a manageable short-term debt of $750 million, Mastercard maintains a solid capital position. Its operating cash flows rose 18.3% year-over-year to $11.2 billion in 2022, 7% to $12 billion in 2023, and 23.4% to $14.8 billion in 2024. It repurchased $11 billion in stocks and paid $2.4 billion in dividends in 2024. Over the period between Jan. 1-27, it bought back another 1.2 million shares for $644 million, with $14.5 billion left in the repurchase program as of Jan. 27, 2025.Its operating margin consistently exceeds 55%, a testament to its efficient model. While short-term macro pressures like slower consumer spending growth could cause some volatility, Mastercard’s global footprint and innovation-driven strategy provide a compelling long-term thesis.The Case for American ExpressAmEx takes a different path by issuing its own cards, extending credit and processing payments. This vertically integrated model gives AmEx more control over customer relationships and allows it to earn both interest income and processing fees.However, this also exposes it to credit risk, which could weigh on results in an economy burdened by inflationary pressures and higher-than-normal interest rates. Traders are expecting the Federal Reserve to start cutting interest rates as the latest set of tariffs is expected to slow the economy. That said, American Express has built a strong moat around its premium brand and affluent customer base. It continues to see solid growth in millennial and Gen Z cardmembers, particularly through its rewards-driven products and travel spending. Its recent results show healthy net interest income and solid cardmember retention, even as delinquencies inch up.Compared to Mastercard’s more globally diversified business (including Europe, Latin America and Asia-Pacific), AmEx remains more exposed to domestic economic shifts. In contrast to Mastercard’s broad expansion into digital banking infrastructure, AmEx’s growth is more tied to lending and card volume. This makes it less agile in capitalizing on non-card payment trends.While AXP’s loyalty programs and premium positioning remain strengths, they may not offset the structural advantages Mastercard enjoys in a rapidly evolving digital payments landscape. Meanwhile, AXP exited the fourth quarter with cash & cash equivalents of $40.6 billion, significantly higher than short-term borrowing of $1.4 billion. But its operating cash flow declined 12% year over year to $18.6 billion in 2023 and 24.3% to $14.1 billion in 2024.In 2024, AmEx returned $7.9 billion to shareholders through a combination of dividends and share repurchases. In March 2025, the company announced a 17% increase to its quarterly dividend, raising it to 82 cents per share. As of Dec. 31, 2024, AXP still had 75 million shares remaining under its authorized buyback program.Price Performance and Valuation of MA & AXPYear to date, Mastercard shares gained 0.8%, while AmEx shares plunged 16.5%, indicating investors’ growing concerns over the impact of increasing tariffs on domestic spending. The S&P 500 fell 4.1% during this time.YTD Price Performance – MA, AXP & S&P 500Image Source: Zacks Investment ResearchValuation-wise, Mastercard trades at a premium to American Express on a P/E basis, but that premium reflects its higher growth expectations and the sustainability of its business, even in tough economic environments. MA’s P/E of 31.97X is higher than its five-year median of 29.83X and AXP’s 15.60X.Image Source: Zacks Investment ResearchEstimates for Mastercard & AmExThe Zacks Consensus Estimate for Mastercard’s 2025 sales and EPS implies year-over-year growth of 12.1% and 8.7%, respectively. Similarly, the estimates for AmEx’s 2025 sales and EPS signal 8.6% and 14.6% year-over-year increases. MA and AXP’s 2026 EPS estimates indicate further 17.4% and 14.9% year-over-year jumps, respectively. However, both stocks’ EPS estimates have been trending southward over the past 60 days.Mastercard’s Consensus Estimate Trend (60 Days)Image Source: Zacks Investment ResearchAmEx’s Consensus Estimate Trend (60 Days)Image Source: Zacks Investment ResearchConclusionBoth Mastercard and American Express are solid companies with distinct strengths. AmEx boasts a premium customer base, steady lending income and comparatively attractive valuation metrics. However, Mastercard’s broader international exposure, lower-risk model and innovation pipeline give it an edge in today’s fast-changing payments environment.Mastercard is better positioned to capture growth in emerging markets and benefit from secular trends like digitization, open banking and cross-border commerce. While it trades at a higher valuation, that premium reflects its superior growth prospects and resilience in turbulent periods. As such, Mastercard appears to have a better hand at the moment, even though both companies currently carry a Zacks Rank #3 (Hold) each.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 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