Source: Images of Money.

Shares of American Express (AXP 0.62%) recently reached their all-time high on the stock market, after reporting impressive fourth-quarter earnings results. Thus, in the past five years, American Express' shareholders must be extremely happy with the total return of 500%, including dividends.

Does American Express have further upside potential after reaching its five-year high? Is it a better pick than others in the credit card space, including Visa (V 0.09%) and MasterCard (MA 0.30%)?

Humming along
In the fourth quarter, American Express has managed to increase its revenue by 5%, from $8.1 billion to $8.5 billion, driven by higher net interest income and higher spending by its card users. Its bottom line surged significantly, from $637 million to $1.3 billion. The low earnings last year were affected by three main factors: a restructuring charge, higher estimated redemptions of Membership Rewards points, and the reimbursements of card members.

Investors should cheer for the lower provisions for loan losses, or the amount American Express put aside for bad loans, down 17% from $638 million last year to $528 million this year. Kenneth Chenault, the company's chairman and CEO, felt bullish about the operating performance:

"Credit quality indicators are at historically strong levels and, while many consumers are still cautious about taking on additional debt, we again saw a modest increase in Card Member loans this quarter." 

One great difference
What makes American Express different from both Visa and MasterCard is its consumer financing activities. While Visa and MasterCard only act as the intermediaries between merchants and consumers, taking transaction fees only, American Express also finances its card users' activities. Thus, it also generated interest income on consumer loans.

Source: American Express.

Nevertheless, because of the lending activities, American Express might face default risk -- the risk that consumers might fail to make payments on their loans. The reduction in the provision for loan losses might indicate management's higher confidence that consumer loans could be paid back.

Looking forward, American Express has been focusing on two main initiatives: reloadable prepaid cards to help consumers move and manage money conveniently, and its Loyalty Partner rewards coalition program. The company believes those two initiatives could be potential growth drivers in the long term. 

Money in your bank
Shareholders could also benefit from AmEx's consistent cash return via both share repurchases and dividends.

In the past four quarters, American Express has spent $4 billion repurchasing shares, reducing the average share outstanding by 4%. MasterCard's EPS also jumped by 17% in the third quarter, driven by $345 million worth of shares repurchases. Visa seems to be the most aggressive when it come to returning cash to shareholders. In the fourth quarter of fiscal 2013, it bought back around $1.3 billion worth of shares and announced a new $5 billion share repurchases program with no expiration date. Moreover, it also increased quarterly dividend per share by 21%, to $0.40. 

Looking forward
With a global leading position, a good cash return to investors, a growing operating performance and potential long-term investing opportunities, American Express could deliver attractive returns to investors in the long run. Moreover, because of its closed-loop business model, investors might feel comfortable investing in this large credit card issuer, which has the lowest fraud rates in the industry.