u/Vig_Newtons ·
Reddit — r/ValueInvesting
· April 06, 2026 at 01:54
· ⬆ 16 pts
· 💬 20 comments
| View on Reddit ↗
AI Summary
Summary
The post analyzes American Express (AXP), arguing the recent 19.5% YTD sell-off is an overreaction to bearish narratives about consumer health and AI.
The author's thesis is that AXP's fundamental performance remains strong (record fees, high ROE, stable delinquencies), creating a disconnect between its price and underlying business quality.
Quality assessment: Well-researched DD, citing specific data from the 10-K and earnings reports to challenge prevailing negative sentiment.
Score16
Comments20
Upvote %94%
▶ Full Post Text
Amex has been sold off by 19.5% YTD. Main talking points against it are the premium consumer is tapped out and AI is going to hollow out the white-collar workforce that funds the whole thing (thanks Citrini Research). Another reason for the recent dip is a $0.03 EPS miss and a 0.2% guidance trim.
Looked through the 10-K and Q4 earnings disclosures. Here are some highlights:
* Full-year 2025 revenue: $72.2B, up 10% YoY
* Net card fees hit a record $10B, **up 18% YoY**, 30 consecutive quarters of double-digit growth
* Q4 billed business up 10% FX-adjusted
* EPS up 15% YoY (excluding prior-year Accertify gain)
* 2026 guidance: 10% revenue growth, EPS of $17.30 to $17.90
The most important ICP for Amex (the high end customer) is not cracking yet. U.S. Consumer 30-day delinquency sits at 1.3% against a 20-year baseline of 1.5%. Nearly 75% of new cards issued were fee-bearing. Q4 spending: luxury retail +15%, international +12% FX-adjusted, restaurants +9%, retail +10%.
The one bear case is U.S. small and mid-sized business spending at roughly 2% growth on about 22% of revenue. However the filings dictate it is contained to this segment. The other 78% of the business is posting record numbers.
They generated $10B per year in membership fees alone. ROE came in at 34% for 2025, roughly 3x the competitor average. $7.6B returned to shareholders last year.
There seems to be a gap in narrative and performance. I currently am not invested but am curious if there are holes in this analysis before any entry would be made.
AXP sold off 19.5% YTD on fears of a tapped-out premium consumer and weak guidance, but key metrics (revenue +10%, card fees +18%, delinquency low at 1.3%) show underlying strength. The market narrative is overly pessimistic, mispricing the stock relative to its consistent, high-quality financial performance and guidance for continued growth. The gap between negative sentiment and strong fundamentals presents a buying opportunity for a high-ROE business with a resilient core customer base. A severe economic downturn that finally cracks the premium consumer segment, or the weakness in small/mid-sized business spending spreading to other segments.