Every American Express (AXP) Investor Should Keep an Eye on This Number

American Express (AXP) shares have significantly outperformed the S&P 500, rising 18% year-to-date, following a strong third-quarter performance that exceeded Wall Street's revenue and EPS estimates. A key factor underpinning this success is the company's robust pricing power, evidenced by a 72% increase in the average annual fee per active card since Q3 2020, reaching $119, driven by its premium brand appeal and valuable cardholder benefits.

Analysis

American Express (AXP) shares have significantly outperformed the S&P 500, climbing 18% year-to-date as of October 20, driven by a strong third-quarter performance. The company reported revenue and earnings per share that both exceeded Wall Street estimates, contributing to a strongly positive market sentiment.

A key fundamental driver of this success is AXP's robust pricing power, with the average annual fee per active card reaching $119 in Q3. This metric has demonstrated consistent growth, increasing 72% since Q3 2020, underscoring the company's ability to successfully raise membership dues.

AXP's powerful brand position attracts higher-income consumers, enabling premium fee structures. Strategic product enhancements, such as the Platinum card refresh incorporating Lululemon and Resy credits, have further stimulated demand, resulting in twice as many average weekly sign-ups for new cards.

Key Decisions for Investors

• Consider AXP's demonstrated pricing power and strong brand equity as key factors supporting its long-term investment thesis
• Monitor the trajectory of average fees per card and new card sign-ups in upcoming reports for continued fundamental strength
• Assess the sustainability of AXP's premium value proposition and its resilience to potential shifts in consumer spending habits among high-income segments