Chicago, IL – April 24, 2025 – Zacks Equity Research shares West Japan Railway WJRYY as the Bull of the Day and a.k.a. Brands Holding Corp. AKA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Express Co. AXP, Visa Inc. V and Mastercard Inc. MA.
Here is a synopsis of all five stocks:
While US equity markets are rebounding this week, thanks to President Trump's softer tone toward Fed Chair Jerome Powell and Treasury Secretary Bessent's optimistic remarks on tariff negotiations, I remain cautious.
Over the past two years, investors have heavily concentrated their portfolios in leading US stocks, which is reasonable as numerous amazing companies are US-based. But given the current macro environment, I believe increasing exposure to international and defensive-oriented names presents a compelling opportunity to diversify. One stock that stands out is West Japan Railway —a name many US investors may not know, but one well worth their attention.
I'll admit I hadn't looked closely at West Japan Railway until it showed up on the Zacks Rank #1 (Strong Buy) list this week. But after digging into the fundamentals, technicals, and macro backdrop, it's clear this is a stock with significant appeal.
West Japan Railway is a major transportation provider operating across western Japan. The company runs one of the most important regional railway networks in the country, including the Sanyo Shinkansen line, which connects economic hubs like Osaka, Hiroshima, and Fukuoka. In addition to its rail services, the company also operates buses, ferries, and has a growing presence in real estate, retail, and tourism, providing it with a diversified and resilient revenue base.
Japanese trains are world-renowned for their speed, efficiency, and punctuality, and West Japan Railway is a model of that operational excellence. This cultural commitment to reliability and customer service extends beyond railways and permeates the entire business. While WJRYY isn't a high-growth stock, it offers what many investors are seeking in today's market: consistency, stability, and defensive cash flow.
WJRYY is also showing strong price action relative to US equity indexes. After struggling through a multi-year recovery after the COVID-19 pandemic, the stock has recently broken out of a large base, signaling a potential new leg higher. This "stage-one breakout" is often a hallmark of long-term trend shifts, and with momentum building, the technical setup looks increasingly constructive.
Its valuation also supports the bullish thesis. The stock trades at just 13.4x forward earnings, below its 10-year median of 14.9x and significantly below the industry average of 18.3x. That means investors are getting a high-quality infrastructure business in one of the world's most stable economies at a discount.
As global capital begins to diversify away from US dollar-denominated assets amid severe uncertainty, Japan offers an appealing alternative. An increasingly strong yen, attractive dividend yields, and a steady economy make Japanese equities, and West Japan Railway in particular, compelling for investors looking for global exposure without taking on excessive risk.
WJRYY may not be on every investor's radar, but in this macro environment, it checks a lot of boxes. It's a high-quality, defensive play with renewed momentum, improving earnings estimates, and a valuation that still looks cheap. For investors looking to add global diversification and reduce volatility, West Japan Railway is a name worth watching.
When searching for potential short candidates, or simply stocks to avoid, apparel stocks are often where I start. It's a notoriously tough industry, defined by rapidly shifting consumer preferences, intense competition, and the constant challenge of managing inventory cycles in a cost-effective way. Even for well-run companies, a lot can go wrong.
Unfortunately, today's Bear of the Day, a.k.a. Brands Holding Corp., is facing several bearish catalysts that make it a name to steer clear of for now. The company is dealing with stagnant sales growth, persistent downward revisions to earnings estimates, and a stock that continues to severely underperform the already weak broad market. Until the fundamentals improve, AKA looks like a stock better left on the sidelines.
Since going public, a.k.a. Brands has failed to generate any meaningful top-line growth. Sales growth has remained flat over the past three years, reflecting weak demand trends. While the company is projecting modest revenue increases of 5% for this year and just 3% next year, those figures barely keep up with inflation and do little to offset rising costs or margin pressure.
The real concern, however, lies in the company's earnings outlook. Over the last 60 days, analysts have aggressively slashed estimates across the board. The current quarter's EPS estimate has been cut by a staggering 228%. Even more striking, the full-year earnings estimate, which was expected to almost turn positive, has been downgraded by a painful 2,825%, reflecting growing pessimism about the company's ability to stabilize margins or return to profitability anytime soon.
These dramatic revisions speak to deeper issues in the business model and raise serious concerns about management's ability to thrive in an environment defined by increasingly complex supply chain issues.
a.k.a. Brands Holding Corp. stock has fallen 93% since its IPO, a stunning collapse that reflects deep structural challenges. Earnings remain firmly in negative territory, with no clear catalyst for a turnaround. And while many fashion retailers are struggling, AKA's situation is made worse by its heavy dependence on Chinese suppliers—at a time when tariffs, rising geopolitical tensions, and shifting global trade dynamics are putting additional strain on companies reliant on low-cost manufacturing from China.
With declining investor confidence, deeply negative earnings, and a vulnerable supply chain, it's hard to make a bullish case for this stock. Until the company shows meaningful progress on improving margins, reducing dependency risks, and restoring top-line growth, AKA is like a name to avoid.
American Express Co., the global integrated payments giant, reaffirmed its full-year 2025 revenue and profit guidance as its affluent customer base continues to spend freely, seemingly unfazed by ongoing tariff-related uncertainty. While many U.S. consumers are feeling the strain of macroeconomic turbulence, AmEx's premium-focused clientele remains willing to pay for the perks and rewards that come with its high-end credit cards.
But just how resilient are these high-net-worth customers in the face of a prolonged economic downturn? Let's first dive into the company's first-quarter 2025 results to get a clearer picture.
EPS:$3.64, beating estimates by 5.5% and up 9% YoY.
Network volumes:$439.6 billion, up 5% YoY.
U.S. Consumer Services: Pre-tax income of $1.7 billion rose 7% YoY.
Commercial Services: Pre-tax income of $836 million declined 5% YoY.
With overall momentum on its side, AmEx remains confident in its growth trajectory.
Revenue Guidance (2025):Reaffirmed at 8–10% growth from $65.9 billion in 2024.
EPS Guidance (2025):Reaffirmed at $15–$15.50, up from $13.35 in 2024.
See the full 1Q25 earnings discussion here.
The Zacks Consensus Estimate for AmEx's 2025 earnings indicates a 13.9% year-over-year increase, while 2026 earnings are expected to grow 14.5%. Revenue estimates for 2025 and 2026 indicate year-over-year growth of 8.5% and 8.4%, respectively.(See the Zacks Earnings Calendar to stay ahead of market-making news.)
AXP has a solid track record of surpassing earnings expectations, delivering an average surprise of 5.2% over the past four quarters.
Over the past month, AXP shares have declined 9.1%, in line with the broader industry downturn. However, the stock still managed to outperform both the industry average and the S&P 500 Index. Meanwhile, competitors like Visa Inc. and Mastercard Inc. saw smaller declines, as they are less exposed to credit risk compared to AmEx.
American Express is trading at a forward P/E ratio of 15.84X, above the industry average of 13.98X, signaling strong investor confidence. While that's a premium compared to peers, Visa and Mastercard trade at significantly higher multiples — 27.39X and 31.51X, respectively — due to their different business models and risk profiles.
American Express continues to stand out by leveraging its unique position as both a credit card issuer and a network operator. This dual role allows it to capture a larger share of transaction economics compared to rivals, contributing to a more profitable and resilient business model, one that even Warren Buffett has backed for decades. Strong credit performance and operational efficiency remain core drivers of its profitability, while rising cardmember spending and expanding lending operations help anchor stability in a shifting economic environment.
That said, this model does expose AmEx to credit risk, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. However, a 9% year-over-year decline in its first quarter provision for credit losses to $1.2 billion suggests improving credit quality and reduced expectations for customer defaults.
While macroeconomic uncertainty may still weigh on billed business and revenue growth, AmEx is showing resilience. Travel and entertainment (T&E) spending remains strong, particularly in lodging, dining, and entertainment, areas where AmEx has doubled down. Its acquisition of Center enhances its footprint in high-end dining and lifestyle experiences, reinforcing its premium value proposition even amid current volatility.
AmEx is also investing in its future customer base, targeting Gen Z and Millennials through focused marketing efforts. Though these groups currently spend less, the long-term strategy is to build brand loyalty early and grow with them over time.
Financially, AmEx is on solid footing. It ended the first quarter of 2025 with $52.5 billion in cash and cash equivalents, up from $40.6 billion at the end of 2024. Short-term debt stood at $1.6 billion. The company also returned value to shareholders by repurchasing 2 million shares for $700 million and paying $600 million in dividends during the quarter.
American Express continues to demonstrate strength through its premium client base, solid financials, and strategic investments in travel, dining and younger demographics. Its improving rainy day fund metrics and resilient T&E spending are clear positives, even as macroeconomic headwinds and tariff uncertainties linger. While long-term fundamentals remain attractive, near-term pressures could limit upside potential. Given the current environment, AXP looks well-positioned — but not without risks — making it a prudent hold at this stage.
AmEx currently has a Zacks Rank #3 (Hold), indicating a neutral outlook. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Mastercard Incorporated (MA) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
West Japan Railway (WJRYY) : Free Stock Analysis Report
a.k.a. Brands Holding Corp. (AKA) : Free Stock Analysis Report
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