How Would American Express Fare During a Recession?
The payments and credit card company American Express (NYSE: AXP) just reported monster results for the second quarter of the year, growing revenue by more than 30% on a year-over-year basis and adding a record 3.2 million new cards in the quarter. While the stock always tends to trade at more of a premium valuation, investors may be growing increasingly concerned about the company because it heavily serves the consumer, which soon may find itself in a recession. Let's take a look at how American Express might fare during a recession.
American Express has one of the most enviable credit card brands in the world, allowing it to charge subscription fees on several of its credit card products. The bank also makes money on credit card loans, which totaled nearly $100 billion at the end of the second quarter. Being in the credit card business obviously exposes the company to the consumer, who can struggle during a recession and lead to higher loan losses.
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Source Fool.com
