American Express Trades at a Discount Despite Faster Projected Earnings Growth Than Visa

Investors seeking total return over a five-year horizon find American Express more attractively priced than Visa. American Express trades at a price-to-earnings ratio of 21.3, while Visa sits at 29.8. The valuation gap reflects the risk inherent in American Express's lending operations. Visa operates only the payments infrastructure. American Express is directly exposed to credit risk. The company manages this exposure by targeting high-income customers with higher spending power. This strategy results in industry-leading charge-off rates. To drive profitability, American Express increased Platinum card annual fees by $200 in 2025 and Gold card annual fees by $75 in 2024. It has also attracted Millennial and Gen Z customers, who are now the fastest-growing customer groups. Analysts expect American Express to grow its adjusted earnings per share at roughly 14.9% annually over the next three years, compared to 12.5% for Visa.