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American Express Nips at Paypal with New 'Serve' Platform

American Express (AXP) logoAmerican Express (AXP) followed in Visa's (V) steps and announced a digital payment and commerce platform dubbed Serve, which enables the consumers to make purchases and person-to-person payments online via mobile phones and at merchants that accept American Express cards. MasterCard (MA) is also planning to launch its own offering for personal payments.

We estimate that American Express derives 73% of our $49.61 price estimate from card transaction and execution fees while Visa derives almost 29% of its $85.03 Trefis price estimate from transaction fees.

Continue reading American Express Nips at Paypal with New 'Serve' Platform

American Express: Don't Leave Your Phone Without It

American Express (AXP) announced "Serve" yesterday, an all-new digital payment platform set to rival eBay's (EBAY) PayPal system. Consumers can use Serve to make digital purchases, pay off bills, transfer funds and send money via Apple's (AAPL) iPhone and Google's (GOOG) Android phones.

Serve is also available via the web and Facebook, and users are provided a debit card as a traditional way for a consumer to access their accounts. The card can be used at any ATM machine or vendor that accepts American Express.

Continue reading American Express: Don't Leave Your Phone Without It

American Express Revs Up Its E-wallet

American Express (AXP)It seems inevitable that our smartphones will become our wallets. After all, they have become a key part of our lives. And smartphones have the power to carry out secure and sophisticated transactions.

As is no surprise, many companies are scrambling to be winners in the e-wallet space. Take American Express (AXP). The company has launched a new e-wallet called Serve.

Continue reading American Express Revs Up Its E-wallet

American Express Partners with Foursquare to Attract Customers

American Express (AXP) logoThe mobile revolution is spawning a variety of business relationships to attract new customers. The latest is the partnership between credit card holder, American Express (AXP) and the social network Foursquare Labs Inc.

Both companies are capitalizing the growing segment of online purchasing. American Express had roughly $100 billion in online transactions last year. Online spending is growing at a 20% rate, compared to15% for overall spending, as reported in the Wall Street Journal.

Continue reading American Express Partners with Foursquare to Attract Customers

Serious Money: Buffett's Next Buys -- You Pick'em

Prognosticators the world over are throwing in their 2 cents about "my pal Warren's" next market moves; especially since he announced last week that his trigger finger was itchy. When Warren Buffett, chairman of Berkshire Hathaway (BRK.A and BRK.B) speaks, investors listen.

On Wednesday March 2, this investor threw in his two cents worth (see:Serious Money: What Should Warren Buffett Do Next?) discussing possible acquisitions. Since all the "pro's", I use the term loosely, have had a say I thought I would give readers a chance to express some of their ideas too.

Continue reading Serious Money: Buffett's Next Buys -- You Pick'em

Serious Money: What Should Warren Buffett Do Next?

Warren BuffettLast Friday Warren Buffett said he was anxious to pull the trigger on another large deal -- having only recently completed the Berkshire Hathaway (BRK.A and BRK.B) acquisition of the Burlington Northern Santa Fe Railroad. Since then, prognosticators far and wide have been making suggestions about his next possible moves.

Considering I wrote about the railroads the day before the BNSF announcement, I thought I would share a few ideas, old and new.

Continue reading Serious Money: What Should Warren Buffett Do Next?

Two Legs of Growth for American Express: Women and Technology

Founded in 1950, New York based American Express (AXP) is a leading global financial services company offering card payment products and travel-related services to consumers and businesses across the globe. It is now the third largest player in the U.S. in terms of card transaction volumes after Visa (V) and MasterCard (MC). It also competes with other financial institutions that have credit card services like Discover Financial (DFS) and Capital One (COH).

Continue reading Two Legs of Growth for American Express: Women and Technology

American Express Outlook Improves on Recovery in Spending

Founded in 1950, New York-based American Express (AXP) is a leading global financial services company offering card payment products and travel-related services to consumers and businesses across the globe. It is now the third largest player in the US in terms of card transaction volumes, after Visa (V) and MasterCard (MA). It also competes with other financial institutions that have credit card services like Discover Financial (DFS)and Capital One (COF).

What differentiates American Express from MasterCard and Visa is its relatively more affluent customer base, which it maintains by offering generous benefits and reward programs. Since American Express brings higher spending consumers to merchants, it can charge a higher commission (known as the interchange fee) on sales. Also, unlike Visa and MasterCard, American Express only issues charge and credit card products but not debit cards, which have been gaining widespread acceptance over the past couple of years. With these critical differences in mind, we explore the opportunities that lie ahead for American Express in an evolving macroeconomic environment.

Our price estimate is $47.16, which is just slightly higher than the current market price.

Impact of Regulatory Reforms

The Obama Administration in February 2010 passed the Credit Card Accountability, Responsibility and Disclosure Act, or the CARD Act which enforces more disclosure about interest rates, caps on service fees, grace periods and also makes it difficult for people under the age of 21 to obtain cards. All this is expected to negatively impact the growth in the number of cards in use but lead to lower net write-off rates and defaults by card members.

The Durbin Amendment, enacted in July 2010, granted the Fed the power to control the levels of this fee. In December, the Fed enforced one such limit - 12 cents per debit card transaction. While this adversely affects the two largest card payments-processing networks Visa and MasterCard, which also issue debit cards, we believe it presents upside opportunity for American Express as credit cards would gain prominence over debit cards, at least from the issuers' end.

Improving Economic Conditions

The macroeconomic conditions are improving in the US, albeit at a slow pace. The unemployment levels are still close to historical high levels but on a downward slope, declining from 9.8% in November 2010 to 9.4% in December 2010. Consumer spending has picked up and so have the corresponding card transactions.

Household purchases, which constitute about 70% of the economy, grew at 4.4% in December 2010, the highest since the first quarter of 2006.American Express' card delinquency rates (the proportion of outstanding balances past the due date to total balances) continues to decline month on month to 2.1% from 2.5% in the previous quarter. Charge-offs (the loans deemed uncollectible and hence, written-off) also declined from 5.2% to 4.4% over the same period. Improvements in macroeconomic conditions hint at more relaxed card-issuing criteria and higher credit limits.

If spending increases more than we currently forecast, this could improve our price estimate. Drag the trend line in the modifiable chart above to see the impact. For example, a 5% increase in annual spending in 2012 per customer translates to around a 2% improvement in our price estimate.

See our estimates for American Express.

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American Express In a Choppy Uptrend

American Express (AXP) logoI first discussed American Express (AXP) here on May 4, 2009, at a price of $27.28, and the stock has continued to progress since, but in choppy fashion.

Fundamentally, American Express continues to improve, as well. Look for the company to report 2011 revenue growth of 7% to 9%, as the U.S. economic expansion progresses, followed by a 5% to 8% rise in 2012.

Continue reading American Express In a Choppy Uptrend

Rising Consumer Credit in the U.S. Should Lift Capital One

Capital One (COF) is one of the largest financial institutions in the United States, with banking and non-banking subsidiaries that market a variety of financial products and services. The company specializes in credit cards, home loans, auto loans, banking and saving products. Its main competitors are JPMorgan (JPM), Bank of America (BAC), Citigroup (C) and American Express (AXP).

We have a price estimate of $61.26 for Capital One, well above market price.

Continue reading Rising Consumer Credit in the U.S. Should Lift Capital One

American Express: Buy or Sell After Q4 Release?

American Express (AXP) was not on Wall Street's list of best buys today. The market is a few minutes away from closing as I write this, and I see that the shares are off by over 2% to $44.82. Volume is quite high.

Should investors be considering this credit-and-charge-card entity for their portfolios? Well, the stock is closer to the 52-week high of $49.19 than it is to the 52-week low of $36.60, but the twelve-month chart shows that the shares have been bouncing around in that somewhat narrow range rather vigorously.

Continue reading American Express: Buy or Sell After Q4 Release?

Futures Down As Investors Await Earnings Reports, Economic Data

U.S. stock futures are lower Tuesday morning, as investors await earnings reports from several major companies as well as data on consumer confidence and housing prices. Futures on the Dow Jones Industrial Average fell 8 points to 11,922.00; S&P 500 futures dropped 3.70 points to 1,284.80; and Nasdaq 100 futures dropped 9 points to 2,289.00.

U.S. stocks closed higher Monday, with the blue-chip Dow index gaining 108.68 points, or 0.92%.

The Case-Shiller home-price index for November is due at 9 a.m. ET and consumer-confidence data for January will be released at 10 am ET.

President Barack Obama is scheduled to deliver the State of the Union address this evening.

Continue reading Futures Down As Investors Await Earnings Reports, Economic Data

U.S. Stock Futures Mixed as Investors Await Earnings Reports

U.S. stock futures are mixed Monday morning, as investors await earnings reports from several major companies. Futures on the Dow Jones Industrial Average gained 3 points to 11,825.00, while S&P 500 futures lost 0.20 point to 1,279.50. Nasdaq 100 futures rose 0.50 point to 2,269.50.

U.S. stocks closed higher on Friday, with the blue-chip Dow index rising 49.04 points, or 0.41%. It advanced 0.7% last week.

No major economic data are due for release today.

Continue reading U.S. Stock Futures Mixed as Investors Await Earnings Reports

Week in Preview: GDP, FOMC Meeting, Housing Data and Lots of Earnings

earnings expectationsWith earnings season in full swing, the FOMC meeting on interest rates, the GDP estimate, and housing numbers due out, the coming week is shaping up to be a busy one. So here's a peek at what's on the economic calendar.

Monday

Quarterly reports from American Express (AXP) and McDonald's (MCD) will highlight Monday. Amgen (AMGN), CSX (CSX), Halliburton (HAL) and Texas Instruments (TXN) are also expected to report strong earnings results.

Continue reading Week in Preview: GDP, FOMC Meeting, Housing Data and Lots of Earnings

Closing Bell: Shaking Off Mixed Earnings (AXP, BA, GS, IBM, MOS, WFC)

Today was a strange day marked by selling in technology and an almost gain in the DJIA. Many key technology stocks sold off as currencies weighed. Much of the media coverage surrounded President Hu's visit from China in D.C. today. Here were today's closing bell levels:

Dow Jones 11,825.29 -12.64 (-0.11%)
S&P 500 1,281.92 -13.10 (-1.01%)
Nasdaq 2,725.36 -40.49 (-1.46%)

Continue reading Closing Bell: Shaking Off Mixed Earnings (AXP, BA, GS, IBM, MOS, WFC)

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Symbol Lookup
IndexesChangePrice
DJIA+5.7512,883.95
NASDAQ+11.782,915.86
S&P 500+2.911,349.96

Last updated: February 09, 2012: 02:13 AM

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