Berkshire Hathaway has reaffirmed its confidence in American Express (AXP), which has now become its second-largest holding. Under the leadership of new CEO Greg Abel, the conglomerate continues to back this investment, originally initiated by Warren Buffett in the 1990s. The recent first-quarter earnings report highlighted American Express’s resilience, showcasing a revenue of $18.9 billion and a per-share profit of $4.28, both exceeding analyst expectations.
American Express stands out among its peers, Visa and Mastercard, by being both a network operator and card issuer. This dual role allows it to maintain strong relationships with affluent consumers, driving a lucrative perks and rewards business. Despite broader economic concerns, the company reported solid double-digit growth, particularly in restaurant and airline spending, indicating that its affluent customer base remains willing to spend.
Investors should note that while American Express’s stock faced a sell-off after its earnings release due to conservative guidance, the company’s growth trajectory and robust performance in challenging environments suggest it remains a strong long-term investment. Berkshire’s continued support reinforces this view.
Source: fool.com