Jim Cramer Says Buy The AmEx Dip Citing Love From Millennial And Gen Z Members — Younger Customers Will Stick With The ‘Company For Decades’

CNBC host Jim Cramer has urged investors to consider buying American Express Co AXP shares despite the recent dip in the stock price.

What Happened: Cramer, on his show “Mad Money,” highlighted the potential of American Express in the long term, especially in attracting younger customers. He emphasized the company’s strong earnings and credit quality, which he believes will only improve with the Federal Reserve’s ongoing interest rate cuts, reported CNBC.

“American Express had tremendous success at winning over lots of younger customers, who will likely stick with the company for decades to come,” Cramer said. “That’s the big story here, not a line or two on the call about a softer spending environment right now, which management is handling with aplomb.” 

Despite a slight revenue miss and a downward revision of its full-year forecast, American Express reported a significant earnings beat. The company’s stock price fell by over 2% following the earnings report. Cramer believes that Wall Street is underestimating the company’s earnings strength and the potential for long-term growth.

He also lauded American Express for its success in attracting younger cardholders, a demographic he believes has a higher lifetime value than older customers. The company’s CFO, Christophe Le Caillec, noted on the earnings call that they are seeing strong loyalty from Millennial and Gen Z members.

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Why It Matters: The recent dip in American Express’ stock price follows a mixed third-quarter earnings report. The company’s revenue (net of interest expenses) grew by 8% year-on-year to $16.64 billion, slightly missing the analyst consensus estimate of $16.67 billion. However, the adjusted EPS of $3.49 beat the analyst consensus estimate of $3.28.

Despite the revenue miss, the company’s Card Member spending or Billed Business grew by 6% (or 6% forex adjusted) year-over-year to $387.3 billion. This performance led analysts to increase their forecasts for the company’s future.

Earlier in October, American Express announced that it would become the sole owner of Swisscard after UBS Group AG UBS sold its 50% stake.

Despite the mixed results, analysts noted that the company’s higher loan volumes, stable growth in Card Member spending, and accelerated card fee revenue growth triggered the topline growth.

Price Action: American Express stock closed at $270.74 on Monday, down 2.19% for the day. In after-hours trading, the stock slightly recovered, rising 0.28%. Year to date, American Express has gained 43.77%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote