Insider Monkey’s comparison favors American Express over Visa as a stock buy, citing AXP’s nearly 16% earnings-per-share growth and lower valuation—about 18 times earnings versus Visa’s 31—while noting that Amex bears consumer-credit risk Visa avoids.
The article contrasts Visa’s payment network, which does not lend, with American Express’s model of issuing cards, lending and operating its own network. Over the past year, Visa generated about $44 billion in revenue and roughly $22 billion in profit; Amex collected about $72 billion and kept roughly $11 billion.
American Express also trades at about 16 times analysts’ expected earnings for next year and pays a larger dividend than Visa, the article says. It says Amex’s affluent cardholders have historically softened, but not eliminated, the effect of consumer weakness. The article identifies Amex’s credit provisions in its Oct. 23 report as a key measure, arguing that contained write-offs would make the valuation discount harder to justify. Visa had agreed in August to buy fraud-detection firm BioCatch for $2.4 billion; the deal had not yet closed.
