AXP Undervalued: Can Long-Term Growth Overcome Higher Spending Concerns

American Express (NYSE: AXP) stock has underperformed its peers and major indexes this year. Despite declining by about 6% year to date, analysts believe investors may be underrating the financial services giant. American Express' stock price rose after it reported strong Q2 earnings, with revenue increasing 10% year over year and earnings beating estimates.

The company's CEO, Stephen Squeri, emphasized that higher spending on customer engagement and acquisition costs is necessary to maintain high retention rates and ensure long-term growth. This investment ramp-up may be a concern for some investors, but it could also contribute to the company's 14% projected earnings growth in 2027.

American Express has been a well-managed company with a strong track record, which is why it is one of the largest holdings in Warren Buffett's Berkshire Hathaway portfolio. With its lower valuation and investment in long-term growth, some believe it could be an underrated buy right now.