At What Point Does American Express Catch A Bid?

American Express is a world leader in charge cards and credit cards targeting higher-end consumers and small-business owners, with compelling travel and entertainment rewards.

American Express [$AXP], which typically serves at the behest of its deep-pocketed individuals and small businesses, likely can’t wait until the ball drops on December 31st. Shares have dipped over 5% for the year, marked by severe drop in airline travel, hotel stays, and restaurant entertainment.

Businesses are allowing people to work from home, leisure travel is stuck at the lows, and small businesses are struggling to survive public health shutdown orders. The Dow has jumped 6.3% while the S&P 500 index has steamed ahead 15.4% this year.

American Express pulls 60% of its revenue from merchant discount fees, 20% from interest on loans, and 20% from card fees, says Moffett Nathanson analyst Lisa Elllis, who dubbed the stock at a Buy earlier this month, with a price target of $155. PayPal & Square Are The New Wall Street Banks

In May, Amex led the pack with tangible, limited time offers to provide value to cardholders in this new reality that we’re living in. Just a month later, their “Shop Small” promotional campaign elevated the profile of independent stores and restaurants at a time when they needed it most.

2020 started strong for American Express, touching a new high of $138 before plummeting 51% to a low of $67 on March 18. It’s the same pattern as other stocks—since mid-March, the shares have steadily regained traction.

As expected, the pandy did some damage to the bottom line. Q1 earnings per share of 41 cents came in far below the expected $1.46, with Q2 earnings per share even lower, at 29 cents. Profit for the full year is estimated to be $3.31 a share versus $7.99 last year, while full-year revenue for 2020 is expected to come in at $36.2 billion versus $43.5 billion in 2019.

Vaccines and a return to normalcy could make American Express stock a bargain for those looking to get in on the reopening trend. It trades at a forward multiple of 17 compared to Mastercard’s [$MA] 40 and Visa’s [$V] 38. Surprise, Surprise: Coinbase Files IPO

Every year since 2010, Amex has had a “Small Business Saturday” event right after Thanksgiving to encourage shopping at small, local businesses. In fact, in 2019, the initiative helped generate a reported $19 billion in spending at these businesses.

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