American Express vs. Visa: Which Buffett-Backed Stock Offers Better Value in 2025?

Warren Buffett's Berkshire Hathaway has long been a stalwart investor in both American Express (AXP) and Visa (V), but as 2025 unfolds, which of these financial giants offers superior risk-adjusted returns? Let's dissect their valuation metrics, profit efficiency, and long-term growth trajectories to uncover the answer.

Valuation Metrics: A Clear Divide in Multiples

Both companies trade at premiums, but their valuations diverge sharply.

- American Express: Trailing P/E of 19.57 (as of Q1 2025), with a P/B of 7.16, reflecting its premium pricing power.
- Visa: Trailing P/E of 36.68 and a P/B of 18.44, signaling investor optimism about its global scale and recurring revenue streams.

While Visa's multiples are sky-high, Amex's valuation is more grounded. Its P/E sits below its 10-year average of 21.1, offering a margin of safety. Visa's P/E, however, is nearly double its industry average, a testament to its dominance but also a warning against overpayment.

Profit Efficiency: ROE and Margins Reveal Operational Excellence

Profitability metrics underscore Visa's edge in capital efficiency, but Amex's resilience shines through.

- Visa: ROE of 46.5% (Q1 2025) and a net profit margin of 52.86%, unmatched in the sector. Its asset-light business model, where it earns fees on every transaction, drives this efficiency.
- American Express: ROE of 34% (Q1 2025) and a net profit margin of 20.7%, reflecting its dual role as a credit issuer and network operator. While lower, its margins remain robust, especially in premium segments like travel and dining.

Visa's margins are a marvel, but Amex's 27 consecutive quarters of double-digit card fee growth and its focus on high-net-worth clients (60% of new cards to Gen Z/Millennials) suggest untapped upside.

Long-Term Growth: Cross-Border Dominance vs. Niche Resilience

Both companies are growth engines, but their paths diverge.

- Visa: Cross-border volumes surged 16% in Q1 2025, fueled by travel recovery and digital adoption. Its global payments ecosystem, including the $675M AI investment, positions it to capitalize on e-commerce and fintech trends.
- American Express: Revenue growth of 8–10% for 2025 is backed by 14% growth in international card services and 20% jumps in card fees. Its strategic acquisitions (e.g., Center for SME tech) and premium loyalty programs are sticky revenue drivers.

Visa's $9.5B in Q1 revenue (10% growth) vs. Amex's $17B (8% growth) highlights scale, but Amex's $52.5B cash pile and shareholder returns ($1.3B in Q1) offer defensive value.

Risk Considerations: Credit Exposure vs. Regulatory Headwinds

• American Express: Relies on credit issuance, making it vulnerable to economic downturns. Its provision for credit losses fell 9% in Q1, but a peak unemployment rate of 5.7% (factored into guidance) poses a risk.
• Visa: Less credit risk but faces regulatory scrutiny. Its $213M in severance costs (Q1) and regional payment volume misses in Latin America hint at execution risks.

The Verdict: Value in Amex, Growth in Visa—Which Wins?

• American Express is the better value play. Its lower P/E and P/B, combined with strong balance sheet metrics (CET1 ratio of 10.7%), offer a cushion against macro uncertainty. Its 2025 EPS guidance ($15–$15.50) suggests 10% earnings growth, aligning with its valuation.
• Visa is a growth juggernaut, but its P/E is 1.8x that of Amex. While its ROE and margins justify optimism, investors pay a hefty premium for its global footprint.

Investment Recommendation

For income-focused investors, Amex's 1.3% dividend yield and shareholder returns ($700M buybacks in Q1) provide stability. For growth investors, Visa's cross-border dominance and AI-driven innovations warrant a position.

But in 2025's market, Amex is the superior risk-adjusted bet. Its valuation is more reasonable, and its focus on premium clients—who spend 3x more than average cardholders—creates a moat. Visa's upside is undeniable, but its price tag demands perfection.

Act now: With Amex trading at 19.57x earnings and Visa at 36.68x, the choice is clear. Buy American Express for value, and hold Visa for the long game—but prioritize Amex in 2025.

Data as of Q1 2025. Past performance does not guarantee future results.