AXP因优先投入长期增长而非短期利润而面临市场压力。

American Express is under severe pressure despite double-digit revenue growth.

The second stock is a company I own, but again, I am not here to give advice on buying stocks. So don't buy a company just because I or anyone else owns it. American Express.

In the last quarter, its revenues grew by 10%. Its profits grew by 11%. It has raised its forecasts for the year. But the stock fell. By more than 6%. So you should ask yourself: Wait, what?

Should a company that is growing at a double-digit rate be penalized because it has a positive problem?

Here's why. Management said it would invest that extra money in bonuses, benefits, and marketing instead of increasing this year's profits , and Wall Street went into overdrive .

But this opens up the debate about whether the market is penalizing a company for spending today in order to grow tomorrow.

Is American Express destroying its profits in a rewards war, or is it investing wisely to become stronger in 10 years? This is the crux of the matter here. The optimists' argument is very strong.

American Express possesses something very rare, which is a "closed-loop" system. It's the card, the payment network , and the bank, all in one entity.

Only a regular bank issues the card. Amex does all of that, and that's why it knows so much and earns so much from every payment. It collects fees from stores, annual fees from us and you, and interest, all with a detailed understanding of how more than 155 million cardholders spend their money.

In fact, the average fee per card jumped by 12%, which is evidence of its ability to charge more for that premium experience.

Even better , its fastest-growing customers are Millennials and Generation Z, dispelling old fears that Amex is only for older people. And its wealthy clients are already paying their bills .

The default rate is only 1%, and less money has been allocated for bad debts compared to last year.

As for that frightening spending that has everyone panicking, a large part of it is allocated to building rewards and benefits that will ensure the loyalty of these valuable customers for decades.

Now, the pessimistic side. The idea that rewards cause exorbitant costs is very real. and Amex's benefits costs jumped 50% in the last quarter.

Secondly, its customers spend lavishly on travel and fine dining , which are precisely the things that quickly fade away during recessions. Third , regulators may step in and put pressure on the merchants’ fees that make their entire business model effective.

That 50% jump in benefit costs is exactly what worries pessimists that its golden profit margins may slowly erode. So, is this massive spending a brilliant investment or the beginning of shrinking profits?

Let's take a look at some of American Express's metrics. Oh my God. I didn't realize the stock had fallen by 18% since the beginning of the year. This is unbelievable. The price is $302 per share.

High gross profit margins. This is the elite company in the field of credit cards. Profit margins are improving. I am not worried about the debt levels. The difference between the market value and the value of the enterprise is $270 billion because it is essentially a company that holds a lot of cash for people, and it owns a bank, which are obligations to others, but it is not like traditional banks.

Well, they don't operate like a traditional bank, but they have high-yield savings accounts and things like that , and that's the money you owe. Therefore, when a bank takes your money and puts it into a savings account, this is considered a debt instrument.

They owe you this money. That's why there's so much debt here. So, I'm not too worried about that.

But, look at this company, look at this. $15 billion in free cash flow last year, $16 billion annually over the past five years, and it sells for 13 times the free cash flow .

Guys, the return on capital is very good, 12% is not bad. They have a good profit margin as I said, a good gross margin of 55%, and a good growth rate. This is the elite credit card for the elite, okay?

Now, look at their net income though. Much less than their free cash flow. The question I pose is: Are their free cash flows a true measure of this company? Let's examine the eight pillars.

So, apart from the very high level of debt, which I don't think is real because of all the high-yield savings accounts , we're putting checkmarks on everyone here.

Let's take a look at the balance sheet to see what is due. We'll move on to the quarterly figures here because I just want to see the quarterly results. Total deposits: $157 billion .

That's a large sum. This is the total amount of deposits they have available . That's why I look at it and say, that's why there's so much debt there.

Let's see what the analysts think. Earnings are expected to rise from $ 17.60 to $29 per share, representing nearly double-digit revenue growth each year . Look at this sudden drop in revenue.

From 79.5 billion it grows to 104 billion before dropping to 76. I wonder why this is happening here, as there are 12 analysts who all say so. This is really strange. I wonder if , you know, something mysterious is going on.

Okay guys, now we move on to the stock analysis tool and make some assumptions about the future. I have calculated revenue growth of 4, 7 and 10% for the next ten years. I set profit margins of 12, 14 and 16%, but I really focus on free cash flow. 23, 26 and 28. The percentage may be a little more precise .

Now, you have just seen me run an analysis of companies like Aeon, McDonald's, and American Express through our tool to get a number, an actual price that I am willing to pay.