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American Express

(AXP) - Get Report

has more than doubled in the past two months on optimism consumers are ready to crack open their wallets as the economy slowly starts to grow again. Shares of

Visa

(V) - Get Report

and

MasterCard

(MA) - Get Report

also have rebounded.

Investors ought to temper their enthusiasm. The share prices of credit card companies are frighteningly high relative to earnings prospects and the profit-payoff date seems frustratingly elusive. A decline in consumer credit and an increase in anti-credit-card-fee sentiment in Congress and the White House are pulling the reins on further gains.

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Retail sales jumped earlier this year after slumping 4.3% during the final quarter of 2008, when the credit crisis was in full swing and the economy contracted. With Americans confronting an unemployment rate of 8.9% and rising, they are sure to shirk the use of plastic.

The run-up in stocks of credit card companies has left them richly priced, considering the uncertainty facing consumers. American Express sells at 36 times this year's earnings, while Visa is at 24 and MasterCard, 18. The

S&P 500

index's price-to-earnings ratio is 14.5. Those lofty multiples leave little room for disappointment.

The buoyant recovery in credit card company stocks was dampened by reports that retail sales slumped 0.4% last month following a setback of 1.3% in March. The dismal news corresponded with progress in Washington on a bill to limit card companies from raising interest rates without giving consumers 45-day warnings, along with other measures that would hurt earnings.

The proposed constraints on credit-card rules would likely impact the bottom lines of Visa and MasterCard less than they would American Express, as their revenue is derived primarily from licensing fees from participating banks and transaction processing. Banks, such as

Citigroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

and

Capital One

(COF) - Get Report

, to which Visa and MasterCard license their credit card brands, bear all the risks of late payments and debt write-offs.

American Express, on the other hand, earns revenue from credit card fees and interest charges on outstanding balances. Therefore, it would suffer from government-mandated constraints on credit card interest rates.

In addition to lower volumes of transactions, the economic slump is resulting in more delinquencies and write-offs of payments from cardholders. American Express had to set aside $1.8 billion to cover credit losses in the first quarter, up 49% from a year earlier. The company wrote off 8.5% of its loans during the quarter versus 6.7% in the previous quarter and up from 4.3% a year earlier.

Visa and MasterCard, on the other hand, make money as long as credit card transactions take place. Card fees and interest rates on outstanding balances don't directly hurt their revenue. But Visa seems better positioned to handle reductions in credit card usage, resulting from consumer cutbacks in credit card debt. Debt-averse consumers, even when they give their credit cards a rest, increasingly have tended to rely on the convenience of debit cards. Visa, the leading distributor of debit cards, has enjoyed a greater volume of purchases from debit cards than from traditional credit cards since the fourth quarter.

Analysts predict that Visa's earnings per share will grow 20% in the next year versus 17% for MasterCard. But investors pay for that with a higher price-to-earnings ratio. MasterCard's more modest P/E ratio is a factor in its grade of C from TheStreet.com Ratings, which equates with a "hold" recommendation. Visa and American Express get a C-minus, which makes them weak "hold" recommendations.

Visa, MasterCard and American Express are certain to prosper when the economy rebounds. But their shares currently carry a lot of risk.

Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.