American Express Has Been a Monster Stock Over the Last Decade. Is the Premium Card Story Already Priced In?
Key Points
Impressive revenue and profit growth have propelled American Express to a market-crushing performance.
The company’s ability to bring in younger consumers shows its brand's resonance with a lucrative user base.
With the American Express shares trading 20% below their peak, the current valuation doesn’t look expensive.
- 10 stocks we like better than American Express ›
Long-term investors want to own compounding machines that can generate strong returns with minimal effort. American Express (NYSE: AXP) fits the bill. Over the last decade, its shares have generated a total return of 467% (as of May 20). That would've turned a $10,000 starting sum into $56,700 today.
That monster performance has occurred even though the financial stock trades 20% off its peak from last December. And this gain is still well ahead of the 327% total return that the S&P 500 produced, which is in record territory.
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Looking at the rise of American Express's shares, is the premium card story already priced in?
Image source: The Motley Fool.
The company's playbook continues leading to success
Solid financial performance drove American Express's shares in the past 10 years. Between Q1 2016 and the first quarter of 2026 (ended March 31), the company's revenue (net of interest expense) climbed at an annualized pace of 8.9%. Diluted earnings per share increased at an even better yearly clip of 11.4%. These fundamentals support stock price gains.
American Express's success rests on its premium positioning. Its brand, which is almost recognized as a luxury offering in the financial services industry, brings in affluent customers with strong spending power. Billed business, a measurement of payment volume, rose 9% year over year in the last quarter.
The company's flagship credit cards, the Platinum Card and the Gold Card, carry hefty annual fees. But they come with incredible perks and rewards that people find valuable. The average fee per card, a proxy for pricing power, more than tripled in the last decade.
In recent years, American Express has been very successful in signing up younger consumers, introducing a lucrative user base. "One of the things we have seen with millennials over time is we get a high share of their wallet right out of the gate, and as time goes on, that high share translates into even more spend as they continue to move through their lives and continue to be successful," CEO Stephen Squeri said on the Q1 2026 earnings call.
What investors should make of the stock's valuation
It's not exactly a secret that American Express is a high-quality business. The fact that Berkshire Hathaway is a large shareholder, owning a sizable 22.2% stake in the company, is a clear indicator of what Warren Buffett and his team think of Amex.
Retail investors are correct in making the same assessment. This is true even though American Express faces ongoing macro risks related to credit quality, as well as competitive threats from rivals.
But the valuation isn't as expensive as it was just five months ago. Prospective investors can buy American Express stock at a price-to-earnings (P/E) ratio of 19.3, which is 20% cheaper than at the start of 2026. If the P/E multiple were around 25, for instance, it would be best to wait for a better entry point.
The leading enterprise in the premium credit card space is a great business that deserves a closer look from investors. The current valuation isn't a stretch. It presents a reasonable entry point to own a proven winner.
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American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express and Berkshire Hathaway. The Motley Fool has a disclosure policy.
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