American Express Company (AXP) operates a unique business model in the financial services industry, acting as both the issuer of its credit cards and the processor of transactions. This "closed-loop" network allows them to directly manage relationships with both card members and merchants.

1. The Business Model (How They Make Money)

American Express primarily makes money through a combination of fees and interest charges. Their core economic engine is driven by encouraging card members to spend, lending them money, and charging merchants for accepting their cards.

Their main revenue streams, based on fiscal year 2025 data, are:

• Global Consumer Services Group: This is their largest segment, generating $34.81 billion, which accounted for approximately 48.02% of their total revenue. This includes revenue from consumer credit cards, such as annual fees, interest on outstanding balances, and transaction fees.
• Global Commercial Services: This segment brought in $16.93 billion, representing about 23.35% of their total revenue. This comes from providing payment and expense management solutions to small, medium, and large businesses.
• International Card Services: This segment contributed $13.00 billion, or roughly 17.93% of their total revenue, from their card businesses outside the U.S.
• Global Merchant and Network Services: This segment generated $7.76 billion, making up about 10.7% of their total revenue. This includes fees charged to merchants for accepting American Express cards (known as "discount revenue") and revenue from their network services.

The company's revenue growth is primarily driven by increased card member spending, higher net interest income from growing loan balances, and strong growth in card fees. American Express focuses on premium products and services, which resonates particularly well with younger consumers, with Millennials and Gen Z representing a significant portion of new account acquisitions.

2. The Metrics That Matter Most

For American Express, given its business as a payments network and a lender, these performance metrics are particularly important:

• Revenue: This metric tells us the total amount of money American Express brings in from all its business activities, like card fees, interest on loans, and fees from merchants. For a company that thrives on transactions and lending, a growing revenue figure shows that more people are using their cards, borrowing money, and merchants are accepting American Express, indicating a healthy and expanding business. American Express reported $72.2 billion in revenue for fiscal year 2025, which increased to $76.0 billion over the trailing twelve months to Q2 2026.
• Net Income: This is the company's profit after all expenses, including taxes and interest, have been paid. It's the bottom line that shows how much money American Express truly earned. For investors, a consistently growing net income indicates that the company is not only generating more revenue but also managing its costs effectively to turn that revenue into profit. American Express's net income for fiscal year 2025 was $10.8 billion, rising to $11.4 billion over the trailing twelve months to Q2 2026.
• Operating Cash Flow: This metric measures the cash generated from American Express's regular business operations, before accounting for investments or financing activities. For a financial company that relies on cash to fund its lending and other services, a strong and consistent operating cash flow is crucial. It shows the company's ability to generate enough cash from its core business to support its growth, pay dividends, and manage its debt without needing to borrow more. In fiscal year 2025, American Express generated $18.4 billion in operating cash flow.
• Return on Invested Capital (ROIC): This metric shows how well American Express is using all the money invested in its business (from both shareholders and lenders) to generate profits. For a financial institution that deploys significant capital in the form of loans and other assets, a high ROIC indicates that management is efficiently allocating and utilizing that capital to create value. As of September 2026, American Express's ROIC was 4.41%.
• Debt to Equity: This ratio compares the total debt American Express has to the amount of money shareholders have invested. For a financial company that uses debt to fund its lending activities, this ratio is a key indicator of its financial health and how much risk it's taking on. A lower ratio generally means less risk. As of Q2 FY26, American Express's debt to equity ratio was 1.72.

3. How to Value This Company

The most relevant valuation metric for American Express is the P/Book value per share (P/Book).

Here's why: For a financial company like American Express, a large part of its value comes from its assets, such as the loans it has made and the money owed to it by card members. The "book value per share" essentially tells you the value of the company's assets per share if it were to sell everything and pay off its debts.

The P/Book value per share compares the current stock price to this book value per share. It helps you understand how much the market is willing to pay for each dollar of American Express's net assets. If the P/Book is high, it means investors believe the company's assets are worth more than their accounting value, perhaps due to strong brand, customer loyalty, or future growth potential. If it's low, it might suggest the market sees the assets as less valuable or that the stock could be undervalued. For American Express, as of September 2026, the price-to-book ratio was 6.50. This metric is particularly useful for financial institutions because their balance sheets, which list assets and liabilities, are often a more direct reflection of their core business value compared to other types of companies.