AXP: Key Acquisitions and Enhanced Membership Models Sustains an Incredible Moat

Catalysts

New Products or Services Impacting Sales or Earnings

American Express has been actively enhancing its product offerings and making strategic acquisitions to drive sales and earnings growth. Here are some key points from recent earnings calls and reports:

Product Innovations and Refreshes:

• American Express is on track to refresh approximately 40 products globally by the end of the year, including a refreshed US consumer gold card [source].
• Recent product refreshes, such as for the Delta, Hilton, and British Airways cards, have helped stimulate demand and drive new card acquisitions [source].

Strategic Acquisitions:

• Acquisitions like Resy and plans to acquire Tock and Rooam aim to expand their dining portfolio and digital offerings for restaurants and merchants [source].

Membership Model Enhancements:

• Continuous enhancements to the Membership Model are fueling the earnings power of the core business and reinforcing confidence in delivering strong bottom-line growth [source].

New Card Acquisitions:

• American Express has been driving strong new card acquisitions, with 3.3 million new cards in Q2 2024 and 3.4 million in Q1 2024 [source] and [source].

American Express is benefiting from several industry trends and tailwinds:

Strong Financial Performance:

• American Express's stock has been one of the best performers in the Dow Jones Industrial Average this year, indicating strong financial performance and investor confidence [source].

Revenue Growth from Card Fees:

• The company has reported 24 consecutive quarters of double-digit growth in revenue from card fees, which topped $2 billion for the first time in Q2 2024 [source].

Challenges in International Operations:

• Russia has cancelled the banking license of American Express's Russian subsidiary, which could potentially impact the company's international operations and revenue [source].

Recent Revenue Performance

American Express has shown consistent revenue growth over the years:

• For the fiscal year ending December 31, 2023, the revenue was $55.59 billion, a growth of 9.69%.
• For the twelve months ending June 30, 2024, the revenue was $58.11 billion, a growth of 9.62%.
• For the quarter ending June 30, 2024, the revenue was $15.07 billion, a growth of 8.73%.

These figures indicate a strong and growing revenue base, supported by the company's strategic initiatives and industry tailwinds.

In summary, American Express is seeing positive impacts on sales and earnings from ongoing product refreshes, strategic acquisitions, and enhancements to their Membership Model. The company is also benefiting from strong financial performance and consistent revenue growth, although it faces some challenges in its international operations.

Assumptions

Revenue Projections

Based on analyst estimates, here are the projected revenues for American Express over the next few years:

• 2024: $66 billion
• 2025: $71.92 billion
• 2026: $77.94 billion

These projections indicate a steady growth in revenue, driven by ongoing product innovations, strategic acquisitions, and enhancements to their Membership Model.

Earnings Projections

Similarly, here are the projected earnings per share (EPS) for American Express:

• 2024: $13.23
• 2025: $14.91
• 2026: $17.10

These estimates suggest a consistent increase in earnings, reflecting the company's ability to attract high-spending customers, expand its card and merchant network, and maintain strong new card acquisitions.

The projected growth in both revenue and earnings for American Express over the next few years is supported by several factors:

• Product Innovations and Refreshes: The company plans to refresh approximately 40 products globally, which is expected to drive new card acquisitions and customer engagement.
• Strategic Acquisitions: Acquisitions like Resy and plans to acquire Tock and Rooam aim to expand their dining portfolio and digital offerings, enhancing their value proposition.
• Membership Model Enhancements: Continuous enhancements to the Membership Model are expected to fuel the earnings power of the core business.
• Strong New Card Acquisitions: The company has been driving strong new card acquisitions, which is a key driver of their business.

These factors, combined with positive industry trends such as strong financial performance and consistent revenue growth from card fees, contribute to the optimistic projections for American Express's revenue and earnings over the next few years.