The way American Express Company (NYSE:AXP) bounced back in 2017 is almost as surprising as the way it fell in the prior two years.

In 2015-16, American Express stock lost 20% of its value, despite the S&P 500 gaining nearly 10%. The sharp under-performance in American Express stock was driven by a confluence of factors. Namely, American Express lost a huge co-branded card agreement with retail colossal Costco Wholesale Corporation (NASDAQ:COST). Then it lost another big co-branded card agreement with JetBlue Airways Corporation (NASDAQ:JBLU). Naturally, rumors started to float around that AXP was losing consumer appeal — particularly among the younger demographic.

But then American Express stock came storming back in 2017.

American Express stock roared more than 30% higher in 2017 as the company got its groove back. Firstly, AXP started to phase out tough laps from losing Costco and JetBlue business. The financials started to clean up, and growth rates returned to normal levels. Secondly, the company continues to illustrate dominance in its core upper-income demographic, and is finally using loyal customers to supercharge loan growth. Thirdly, secular shifts away from cash payments continue to accelerate, and that only benefits AXP.

All told, 2015 and 2016 were ugly for American Express stock, and 2017 was pretty. How is 2018 shaping up? Somewhere in the middle — American Express stock is down 5% year-to-date.

I think that is how American Express stock will trend over the next several quarters and years. Things won’t be ugly. But they won’t be that pretty, either. This is a reasonably valued stock with good, but not great, fundamentals. The stock isn’t very exciting. It isn’t very sexy. But it should head higher from here alongside a healthy global economy.

Here’s a deeper look:

American Express Stock Fundamentals Are Good, Not Great

The fundamentals underlying American Express stock are good. But they aren’t great.

American Express has established a solid niche for itself as a financial services provider for status-oriented and high-income individuals and organizations. And the company does a great job of satisfying that specific niche of the market. A recent J.D. Power survey found that American Express has the most satisfied customers in the credit card world.

This niche will continue to grow. It’s not because more members are joining the niche. It’s because the whole world is going cashless. Non-cash transactions rose 11% in 2015, the highest growth rate in a decade. Meanwhile, American Express management believes that its addressable consumer card spend market will continue to grow at a 10% clip over the next several years.

This makes a ton of sense. All payments are going cashless. Some are going mobile. Some are going to credit cards. That is where AXP will win.

But where American Express won’t win is with new customers. Competition in this space is getting stiff. JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc (NYSE:C) have gone after AXP’s core upper-income demographic, and done so with great success.

Perhaps more importantly, there are secular changes happening in the financial services industry that run counter to AXP trying to grow its customer base. Namely, millennial adults don’t bank the way their parents do. About 63% of millennial adults don’t have a credit card, while 71% say they would rather go to the dentist than listen to what banks say. Even more shocking, roughly a third believe they won’t need a bank in five years.

Therefore, when I hear that tech giants like Amazon.com, Inc. (NASDAQ:AMZN) are making moves to potentially disrupt traditional banking, I get nervous for companies like AXP.

Overall, then, I think American Express can continue to grow nicely within its upper-income, status-oriented niche over the next several years. But the company will have a tough time growing its customer base among the all important (and getting wealthier) millennial adult crowd.

Bottom Line on AXP Stock

The fundamentals supporting American Express stock aren’t great. They are simply good with a healthy amount of risk. Considering AXP’s market is growing around 10% per year, good fundamentals should drive somewhere between 5-10% revenue growth.

Meanwhile, margins are under pressure, thanks to the aforementioned stiff competition. Competition isn’t going to ease anytime soon, so margins will remain under pressure. The company has a ton of buyback power, but without margin drivers, this is a 10-15% earnings grower, at best.

American Express stock trades at 13-times forward earnings, which is an exceptionally reasonable valuation for 10-15% earnings growth. As such, there is a strong argument for American Express stock being undervalued at these levels. This could be a steady grower over the next several years.

But I don’t see explosive returns ahead. Just good, decent, solid growth alongside a global economy that has finally got its groove back.

As of this writing, Luke Lango was long COST.