American Express (AXP -0.62%) recently reported its 2023 second-quarter financial results, and shares are down more than 5% since the announcement on July 21. The business posted revenue (net of interest expense) of $15.1 billion and diluted earnings per share (EPS) of $2.89, both up 12% from the year-ago period. 

Earnings beat estimates, but the top-line figure missed Wall Street analysts' expectations. And investors seem to be concerned about slowing growth in payment volumes, as well as higher loss reserves. 

After these mixed results, is now the right time to buy this financial stock, which is still up 11% in 2023? Let's take a closer look at what's going on with American Express. 

Zooming in 

In the latest quarter, Amex handled $427 billion in network volume, up just 9% year over year. That growth rate is significantly slower than what the company reported in each of the previous five quarters. Because Amex collects fees every time its cards are swiped, this is probably worrying some investors who are thinking of a possible recession facing the economy in the near term. That could cause further slowdowns for Amex. 

Another potential trouble spot is Amex's total provision for credit losses in the quarter of $1.2 billion. This is capital the company sets aside in anticipation of loan losses. That figure was up only $143 million from Q1, but it was roughly triple the amount set aside in Q2 2022. 

Additionally, the company's net write-off rate was 1.8%, which measures the amount of customer balances outstanding that Amex doesn't expect will be paid back. That's been climbing steadily over the past several quarters, although it remains below Q4 2019's level of 2.2%. 

Travel and entertainment spending was a positive contributor to Amex's latest financials. Spending at restaurants and airlines increased 15% and 12%, respectively.

Millennial and Gen Z customers are the biggest growth driver, an encouraging sign because this demographic can be lifelong Amex customers, thus having a greater long-term value. On the flip side, however, they might not be as financially savvy as older and wealthier customers. 

Amex's quarterly performance was solid, to be sure. But investors were probably also disappointed that the management team didn't upgrade the full-year outlook, especially after double-digit percentage revenue and earnings gains. Executives still see the business posting revenue growth of 15% to 17% and diluted EPS growth of 12% to 16% in 2023. Both of these figures still represent outstanding forecasts. 

What really matters 

It's easy to get caught up in a single quarter's financial results, especially when the macroeconomic backdrop is full of uncertainty. But investors would be better off by also focusing their attention on the bigger picture. 

American Express possesses an incredible brand that is recognized around the world. And this attracts a wealthier clientele compared to other credit card companies out there. That's why shareholders shouldn't worry too much about higher loss rates and greater capital set aside for reserves. Traditionally, Amex performs much better in this area than its peers. 

A strong brand is probably also a key reason that Warren Buffett, through his conglomerate Berkshire Hathaway, owns 20% of the shares outstanding of the financial services business. Amex has staying power because consumers love using its cards, and I don't see this changing anytime soon. 

It's also important to consider the valuation of Amex shares. After the recent sell-off, they trade at a price-to-earnings (P/E) ratio of less than 17. That multiple is below the three-, five-, and 10-year average P/E for Amex's stock. Amid the weakness surrounding the stock price after the Q2 financial update, it might be a great time to take advantage of the market and add American Express to your portfolio.