Key Points

• American Express is a well-run financial giant.

• The company's target audience is highly resilient to economic hardship.

• Is the strength of this business model enough to make it a buy?

• 10 stocks we like better than American Express ›

American Express (NYSE: AXP) is one of the stocks owned by Warren Buffett within Berkshire Hathaway's stock portfolio. That fact alone is enough to get some investors to buy the stock.

However, you really need to consider other factors, like the business behind the stock, as well as its price tag. Here's a look at whether American Express is worth buying right now.

American Express has a great business

American Express is a financial giant, acting largely as a payment processor. The company's logo adorns credit cards that get used in retail establishments and online. Each transaction generates fee income for American Express. It issues its own cards, too, so it generates card/membership fees directly from customers there, as well.

One differentiation between American Express and its peers is that Amex, as it is often called, focuses on more affluent customers. Wealthier consumers tend to be more resilient during economic downturns. Basically, they have the money to keep spending even as less affluent consumers hunker down. That means that Amex's business will usually perform relatively well during recessions and other periods of economic uncertainty.

So far, 2025 has been filled with uncertainty. From tariff fights to stock market corrections, the news has been filled with negative headlines. In fact, American Express' stock price fell along with the S&P 500 (SNPINDEX: ^GSPC) earlier in the year. And it has recovered along with the index as well, as investors regained confidence.

What's notable, however, is that American Express' price moves have been more dramatic than the market's moves.

American Express is still below its high-water mark

That's an interesting sign, since it could mean that Amex's stock has more recovery potential ahead of it. Given the strength of its business model, that isn't an unreasonable assessment.

However, there's also a negative way to view the price swing. It could very well be that investors got overly enthusiastic about the business and bid the price up to unrealistic levels earlier in the year. And the return toward those levels just indicates that investors are, again, being overzealous with their expectations.

A look at traditional valuation metrics, perhaps unfortunately, suggests the second explanation is the more likely one. American Express' price-to-sales ratio is currently around 3.1, compared to a five-year average of 2.6. The price-to-earnings (P/E) ratio is currently about 20.5, versus a longer-term average of just under 19. And the price-to-book value ratio is 6.6 today, compared to a five-year average of roughly 5.