Does Amex’s 22% Rally in 2025 Mean There’s Still Value for Investors?
November 27, 2025
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Ever wondered if American Express is a savvy investment right now? If you are searching for value in major financial stocks, you might be surprised at what stands out in their numbers.
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The stock has delivered an impressive streak, with a 22.0% gain year-to-date and a 139.7% jump over the past three years, signaling real optimism from investors.
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Some of this momentum has tracked alongside industry headlines, such as regulatory changes and shifts in consumer credit spending. These factors have helped fuel bullish sentiment while also raising new questions about future growth and risk.
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According to our valuation checks, American Express scores just 1 out of 6 for undervaluation, so there is more to uncover here. Let’s dig into the numbers with a few tried-and-true valuation methods, and later on we will look at a smarter, more holistic way to value stocks.
American Express scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns valuation model measures how effectively a company is generating returns above its cost of equity. In other words, it helps investors see how much additional value is created after covering the cost to shareholders for the capital they have provided.
For American Express, the numbers stand out. The company’s book value is $47.05 per share, while analysts estimate a stable earnings per share of $18.40, based on weighted future Return on Equity projections from 13 analysts. The cost of equity is estimated at $4.26 per share, which means American Express posts an excess return of $14.14 per share. That is a notable figure, supported by an average Return on Equity of 36.20%, which is well above industry norms. The model also suggests a stable book value moving forward of $50.82 per share, according to projections from 9 analysts.
The estimated intrinsic value using this approach is $327.07 per share. Based on current prices, the Excess Returns model indicates American Express is 11.3% overvalued. This suggests the stock is trading above what the company’s fundamental return on invested capital justifies today.
Result: OVERVALUED
Our Excess Returns analysis suggests American Express may be overvalued by 11.3%. Discover 927 undervalued stocks or create your own screener to find better value opportunities.
The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies like American Express. It connects a company’s market price directly to its underlying earnings per share. Since American Express has a solid earnings track record, the PE multiple gives investors a quick sense of how much the market is willing to pay for each dollar of earnings generated.
When interpreting a “normal” or “fair” PE, it is important to consider not just current profits, but also growth expectations and risk. Rapidly growing companies or those with low risk profiles can justifiably command higher PE ratios, while riskier or slower-growing firms typically trade at lower multiples.
Currently, American Express trades at a PE ratio of 24.1x. This sits just below its peer average of 25.4x, but well above the broader consumer finance industry average of 9.7x. However, instead of only looking at industry or peer benchmarks, the Simply Wall St Fair Ratio is also considered. This ratio is designed to reflect what a justifiable PE should be for American Express specifically, accounting for factors like earnings growth, market cap, profit margins, and sector risks. The Fair Ratio for American Express is 19.9x, meaning that all else being equal, the market is paying a bit more for the stock than these fundamentals warrant.
Because the actual PE ratio of 24.1x is noticeably higher than the Fair Ratio, this points to the stock being overvalued using this approach.
Result: OVERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a smarter approach that goes beyond just numbers and ratios. A Narrative is simply your story about a company, combining your assumptions about future revenue, earnings, and profit margins with your view on what the company is truly worth. Narratives bridge the gap between financial forecasts and fair value by allowing you to test your beliefs about American Express’s future, from expected growth rates, margin trends, and industry changes, to see how they affect a fair valuation.
Unlike fixed valuation models, Narratives are dynamic and adjust as new information, such as news or earnings, emerges. This makes them a practical, accessible tool for investors of any level. Available to millions of users on Simply Wall St’s Community page, Narratives empower you to decide if and when to buy or sell by visualizing how your Fair Value aligns against the actual market price.
For American Express, one investor’s Narrative might see strong earnings growth and expanding margins justifying a fair value as high as $366.63. Another more cautious view, factoring in rising competition and slower revenue, might see fair value at just $230. This demonstrates how your outlook can directly shape your investment decision.
For American Express however, we’ll make it really easy for you with previews of two leading American Express Narratives:
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🐂 American Express Bull Case
Fair Value: $366.63
Current Discount: -0.73%
Revenue Growth Assumption: 11.1%
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Forecasts robust growth, fueled by younger customers, international expansion, and enhanced premium products aligned with shifting global consumer trends.
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Sees tech investments, B2B platforms, and product refreshes driving higher retention, operational efficiency, and expanding profit margins.
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Warns that digital wallet disruption, regulatory risks, and higher costs could threaten traditional revenue sources and long-term momentum, but expects margin and earnings upside if bullish assumptions hold.
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🐻 American Express Bear Case
Fair Value: $350.87
Current Premium: 3.73%
Revenue Growth Assumption: 10.1%
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Points to strong premium card positioning and focus on younger cardholders as drivers for international growth and earnings stability.
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Highlights competitive and digital payment pressures, along with higher customer rewards and operating expenses, as key risks to future profitability.
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Estimates shares are trading slightly above fair value, suggesting the current price reflects optimistic assumptions about ongoing momentum and margin strength in a competitive market.
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Do you think there’s more to the story for American Express? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AXP.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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