Is it time to buy American Express stock after solid third-quarter results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 22, 2021
  • American Express shares on Friday edged higher after announcing solid FQ3 results.
  • The company reported its most recent quarterly results before markets opened, beating estimates.
  • CEO Stephen J. Squeri said he expects the company to maintain sustainable long-term growth.

On Friday, American Express Co. (NYSE:AXP) shares advanced higher after announcing its most recent quarterly results. The company reported solid fiscal third-quarter revenue and earnings, beating the consensus for Street expectations.

 AXP CEO Stephen J. Squeri said he expects the company to maintain sustainable long-term growth, reiterating earnings forecasts for the fiscal year 2022.

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In the earnings statement, he said:

We remain confident in our ability to be within the high end of the range of the EPS expectations we had for 2020 in 2022.

American Express shares have added more than 50% in market value this year, and nearly 70% over the last 12 months.

Should you bet on AXP’s growth prospects?

With the AXP CEO assuring investors of the company’s ability to maintain sustainable long-term growth, the stock could rally significantly going into the tail-end of the year.

AXP shares trade at reasonable trailing 12-month and forward P/E ratios of 20.63 and 18.85, respectively. Moreover, analysts expect the company’s earnings per share to grow at an average annual rate of about 41% over the next five years, as compared to an average decline of 5.7% in the previous five.

Therefore, given AXP’s reasonable valuation multiples, it could be time to bet on its exciting growth prospects.

Source – TradingView

Technically, American Express shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has moved closer to the overbought conditions of the 14-day RSI.

However, with shares yet to retest the trendline resistance, the bull-run could continue for the foreseeable future. Therefore, investors could target extended gains at about $184.02, or higher at $190.36. 

On the other hand, if the stock pulls back before reaching the trendline resistance, it could find support at $170.19, or lower at $163.51.

It may not be too late to buy AXP

In summary, although AXP shares seem to have rallied closer to overbought conditions, the stock could extend gains amid its exciting growth prospects and reasonable valuation multiples.

Therefore, it could be time to bet on American Express shares.

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