American Express Stock Soars 11% on Strong Q3 Results, Platinum Card Relaunch
American Express (AXP) has seen its stock rise 11% in the last quarter, driven by impressive third-quarter results and a successful Platinum Card relaunch. The global payments company's stock price now looks compelling, trading at a lower price-to-earnings multiple than Visa and Mastercard.
American Express's third-quarter revenue surged 11% year over year to $18.4 billion, while earnings per share jumped 19% to $4.14. This strong performance was boosted by a 9% increase in billed payments to $421 billion and a 16% rise in net profit to $2.9 billion. The company's cardmember fee income climbed 18% and net interest income rose 12%.
The successful relaunch of the Platinum Card, with U.S. account openings doubling, further fueled growth. American Express's cardmember spend growth accelerated to 9%, with management raising full-year guidance to expect 9% to 10% revenue growth and earnings per share of $15.20 to $15.50. Despite the rally, American Express's stock trades at a lower price-to-earnings multiple than Visa and Mastercard, but it participates more in the profit pool per dollar of spend and has more control over the customer's overall experience.
American Express's stock offers an attractive investment opportunity, with a fair price-to-earnings multiple of about 23. Its revenue is growing at double-digit rates, spend is accelerating, and fee income tied to its premium cards is driving growth. The company's unique model of issuing cards, extending credit, and earning fee income from premium customers sets it apart from Visa and Mastercard. American Express's cardmembers spend an average of three times more on their cards than the average spend per card on other networks.
