Credit card behemoth and Dow-30 component American Express (AXPFree American Express Stock Report) has released better-than-expected September-quarter financials. For the interim, revenues of $8.3 billion were in line with our estimate, but the share-earnings tally of $1.25 bested our call by a couple of pennies. In addition, the bottom-line result was almost 15% higher than the year-earlier figure. The solid showing mostly stemmed from higher cardmember spending. Net interest income also increased, which reflected lower funding costs and growth in cardmember loans.

Diving deeper into the quarterly results, revenues rose 6%, year over year. The provision for loan losses declined modestly and credit quality remains very high. In fact, loan losses are at very manageable levels, which we attribute to Amex's affluent customer base. Upon the earnings announcement, shares of Amex were up about 1% in after-market trading.

Looking ahead, we continue to like the company's prospects. Although concerns abound, particularly in regard to the impact of the government shutdown and the overall health of the economy, we anticipate that cardmember spending will continue to increase at a healthy rate over the next several years. Furthermore, Amex's customers possess good credit scores, so loan losses should remain in check. Continued, gradual improvements in the U.S. housing and job markets would also benefit the company's top and bottom lines.

For the fourth quarter, we are keeping our bottom-line estimate of $1.25 a share unchanged, which would represent a 15% year-over-year advance. Our full-year 2013 estimate is now $4.92. Looking to 2014, our share-net call remains $5.30, which is almost 8% higher than this year's probable tally. Further out, we project that earnings will exceed $6.50 a share by the 2016-2018 timeframe.

As for the equity, it has performed very well of late. In fact, year to date, the stock's price has advanced more than 30%. In comparison, the Dow Jones Industrial Average has advanced about 16% over the same period. All told, at this time, we think that Amex shares are fairly valued. That said, we continue to believe that this issue would make a fine addition to equity portfolios with a conservative, long-term approach.

About The Company: Established in 1850, American Express Company has grown to become a leading global payments, network, and travel firm. It operates through multiple business segments, including the Global Consumer Group and Global Business-to-Business Group. The company sold its AMEX Life business in October of 1995 and its American Express Bank in February of 2008. In mid-1994, it spun off Lehman Brothers to shareholders and ten years later, did the same with American Express Financial Advisors.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.