6) American Express Company (NYSE:AXP)
GAMCO Investors’ Stake Value: $131.12 million
Percentage of GAMCO Investors’ 13F Portfolio: 1.42%
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) is a global financial institution, that provides consumers and businesses with charge and credit card payment products.
The payments are shifting to electronic forms, which continues to benefit American Express Company (NYSE:AXP). The company has a strong brand value, which attracts loyal and highly profitable customers. Its growth should continue to be helped by healthy international activity, and new cardmembers, mainly the youth.
In 2Q 2024, American Express Company (NYSE:AXP) saw stable growth of 6% YoY in billings, healthy new card acquisitions of 3.3 million, and double-digit growth in card fee revenues for 24th consecutive quarter.
The network effects should continue to act as a tailwind for the company’s business. The company has ~150 million credit cards in circulation, with millions of merchants accepting such cards. Since 2021 end, the company has grown its business significantly, improving revenues by ~50% and card member spending by ~40%. The company added ~23 million new cards and more than 30 million merchant locations.
The payment volume, card fees, and interest income on card loans should be able to support overall revenue growth moving forward. Apart from these drivers, healthy loan underwriting and operating leverage can fuel its earnings growth.
Analysts at Royal Bank of Canada increased their target price on the shares of American Express Company (NYSE:AXP) from $265.00 to $267.00. They gave an “Outperform” rating on 22nd July. According to Insider Monkey, 68 hedge funds were bullish on American Express Company (NYSE:AXP) as of 2Q 2024.
Artisan Partners, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said about American Express Company (NYSE:AXP):
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
