Why American Express (AXP) is a Top Stock for the Long-Term

Zacks' Focus List, a portfolio selected via earnings estimate revisions and the proprietary Zacks Rank, has significantly outperformed the S&P 500, achieving a 2,519.23% cumulative return against 854.95% from 1996-2021. American Express (AXP) serves as a key example, having gained 110.69% since its December 2021 inclusion. While currently rated a Zacks #3 (Hold), AXP has seen recent upward earnings estimate revisions for fiscal 2025 and anticipates 14.3% earnings growth for the current fiscal year, highlighting the strategy's focus on earnings momentum.

Analysis

American Express (AXP) has demonstrated significant stock appreciation, gaining 110.69% to $342.31 since its inclusion in the Zacks Focus List on December 23, 2021. This performance is attributed to a methodology centered on upward earnings estimate revisions. While AXP's current Zacks Rank is a #3 (Hold), down from a likely #1 (Strong Buy) or #2 (Buy) at the time of its selection, forward-looking indicators remain positive. The company is projected to achieve 14.3% earnings growth for the current fiscal year and has a history of delivering an average positive earnings surprise of 4.6%. For fiscal 2025, two analysts have revised their earnings estimates upward within the last 60 days, though this has resulted in only a marginal $0.01 increase in the consensus estimate to $15.26. The analysis highlights AXP's closed-loop payment network as a structural advantage over open-loop peers like Visa and Mastercard, as it facilitates direct engagement with both merchants and cardholders, enabling superior data analytics and customer loyalty.

Key Decisions for Investors

• Investors who have held AXP since its 2021 inclusion should consider the 110.69% gain and the stock's current 'Hold' rating as a potential signal to trim positions and realize profits.
• Despite the 'Hold' rating, the forecast of 14.3% earnings growth for the current year and a consistent record of earnings beats may justify maintaining a core position for long-term holders confident in the underlying business fundamentals.
• Potential new investors should monitor for a re-acceleration in positive earnings estimate revisions, as the recent marginal $0.01 increase in the fiscal 2025 consensus suggests that the momentum driving the initial investment thesis may be decelerating.
• The stock's durable competitive advantage, derived from its closed-loop network, remains a key factor supporting a long-term bullish view, but this should be weighed against the moderating signals from the proprietary ranking system that initially identified the opportunity.