American Express Company AXP, also known as AmEx, holds a distinct position in the payments world. Unlike Visa Inc. V and Mastercard Incorporated MA, which operate asset-light networks, AmEx carries loans on its own balance sheet. That structure makes leverage a strategic tool when credit conditions are healthy. Borrowed capital boosts earnings on every dollar of equity, while a sizable cash and liquidity reserve provides protection when the environment tightens. In practice, AmEx uses debt to power returns and liquidity to absorb volatility rather than to survive it.
AXP’s long-term debt-to-capital of 64.1% stands above the industry average of 43.5%. As of Sept. 30, 2025, long-term debt reached $57.8 billion, with $1.4 billion in short-term borrowings. Cash and cash equivalents of $54.7 billion rose sharply from $40.6 billion at the end of 2024, underscoring a defensible liquidity cushion. In a favorable cycle, this combination drives high returns. When the cycle turns, it pressures margins but avoids survival risk.
The more interesting shift is AmEx’s aggressive push into Gen Z and Millennial acquisition. Younger customers initially appear riskier than the legacy premium base: thin credit histories, higher lifestyle volatility and faster charge-off curves. The risk is real, but the company is not chasing mass volume. It is cultivating future premium cohorts with higher lifetime values: young professionals, early-career high earners and aspirational travelers with rising income trajectories. In the third quarter, AmEx issued 3.2 million new proprietary cards, and 64% went to Millennials and Gen Z.
Risk management reflects the balance sheet model. AmEx uses lower initial limits, rich behavioral data from its closed-loop network and gradual underwriting that scales with proven spend. Slightly higher seasoning losses are treated as investments in long lifetime value, supported by fee revenue and premium engagement. In short, the brand is expanding without diluting quality.
AmEx’s Advantage Over Visa & Mastercard
AmEx also differentiates itself from Visa and Mastercard by integrating deeply into the hospitality journey, from reservation to service. Partnerships and platforms enable curated dining experiences, including real-time preference insights for restaurants. This end-to-end control creates emotional loyalty rather than transactional convenience, strengthening AmEx’s premium identity and making the brand increasingly magnetic for younger consumers. Visa and Mastercard, as payments-focused networks, do not have similar consumer-facing reaches.
AmEx’s Price Performance, Valuation & Estimates
Shares of AXP have gained 22.1% in the year-to-date period against the industry’s decline of 3.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, AmEx trades at a forward price-to-earnings ratio of 20.80X, down from the industry average of 24.32X. AXP carries a Value Score of C.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AmEx’s 2025 earnings is pegged at $15.43 per share, implying a 15.6% jump from the year-ago period.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Mastercard Incorporated (MA) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
