American Express [AXP] – Gabelli Funds Analyst Macrae Sykes (12.13.2019)

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My name is Macrae Sykes and I am an analyst with Gabelli Funds.
This week we hosted a meeting with American Express management at our Rye headquarters.

American Express is an iconic financial services brand with leading consumer and commercial businesses including its flagship product, the platinum card. Shares of the company are trading around $120 per share times 820 million shares for a market capitalization of 100 billion.

We continue to like the shares and the long-term fundamental outlook.

Since taking over as CEO two years ago, Steve Squeri, has run a more focused integrated platform. He has consolidated reporting units for efficiency and improved margins through organic growth and cost discipline.

With nine straight quarters of strong results, the firm has demonstrated its global strategy is working with a focus on less competitive markets with faster growth. One country of note is Japan, which is growing mid-teens and benefitting from a government led movement to digital acceptance. The firm’s brand and scale also provide significant competitive aspects to drive share gains.

In summary, management is confident in its mix to expect 8%+ top line revenue growth. With additional operating leverage and 4%+ accretion through repurchases, the company should generate low to mid double digit EPS gains going forward with the potential for faster growth as the firm’s business mix moves more overseas. With a low multiple and current visibility we believe the shares offer a compelling opportunity.