AXP  American Express Company

Exchange

NYSE

Sector

Finance

Industry

Finance: Consumer Services

Market Cap.

70.93B

Vuru Grade

70.67/100

Current Price

$79.25
-1.08 (-1.34%)

Growth Price

$62.39
Overvalued by 21.28%

Stability Price

$115.02
Undervalued by 45.14%

Company Metrics

  • P/E 14.31
  • P/S 2.43
  • P/B 3.42
  • EPS 5.54
  • Cash ROIC 3.84%
  • Cash Ratio -
  • Dividend 1.28 / 1.61%
  • Avg. Vol. 4.02M
  • Shares 895.02M
  • Market Cap. 70.93B

Company Description

American Express Company provides charge and credit payment card products, and travel-related services worldwide. It offers a range of products and services, including charge and credit card products; expense management products and services; consumer and business travel services; stored value products, such as Travelers Cheques and prepaid products; network services; merchant acquisition, and mer... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

American Express? More Like American Slowdown
Seeking Alpha - Apr 27, 2017
American Express (NYSE:AXP) has been extremely strong since mid-October, almost rising straight up with just a few pullbacks, but had since leveled off a bit, until a recent earnings week rally.
5 Things You Didn't Know About American Express
Motley Fool - Apr 28, 2017
Most Americans, as well as millions of other people around the world, are familiar with American Express (NYSE:AXP), mainly because of its charge and credit card products.
Brokerages Expect American Express Company (AXP) Will Post Earnings of $1.28 ... - The Cerbat Gem
Ledyard National Bank Boosts Stake in American Express Company (AXP) - BNB Daily (blog)
Why American Express Company Stock Jumped 6% Today
Motley Fool - Apr 20, 2017
Increased rewards expenses somewhat offset higher revenue, as the company refreshed its American Express Platinum card to compete with other high-end cards, including a recent product launch by JPMorgan's Chase brand, the Chase Sapphire Reserve.
American Express Sends A Wake-Up Call To Bears - Seeking Alpha
International Efforts Begin To Bear Fruit For American Express - Benzinga
American Express: Threats On The Horizon?
Seeking Alpha - Apr 14, 2017
American Express (NYSE:AXP) is one of the oldest companies on the stock exchange, having been founded 167 years ago in 1850 by William G. Fargo and Henry Wells of Wells Fargo (NYSE:WFC).
Is American Express a Great Stock for Value Investors?
Yahoo Finance - Apr 24, 2017
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process.
American Express: Bullishness Will Certainly Prevail
Seeking Alpha - Apr 5, 2017
The valuation multiples of American Express should be higher than what it is enjoying currently, given the fact that the headwinds the company was facing in the past couple of years don't exist any longer. In this light, I believe smart money will flow ...
Earnings Reaction History: American Express Company, 55.6% Follow-Through ...
Nasdaq - Apr 19, 2017
American Express Company ( AXP ) is due to issue its quarterly earnings report in the upcoming extended-hours session. Given its history, traders can expect very active trading in the issue immediately following its quarterly earnings announcement.
American Express' Q1 Earnings Show Impact From Loss of Costco Co-Branded Card
Motley Fool - Apr 24, 2017
American Express (NYSE:AXP) is in the midst of a transition, readjusting to life without its Costco co-branded credit card, which was discontinued last year after the companies couldn't come to terms on a renewed agreement. Reflecting this breakup, the ...
How Does American Express Company (AXP) Stack Up Right Now? - StockNewsJournal
American Express Company (NYSE:AXP) Start of a Bullish Trend?
Live Trading News - Apr 21, 2017
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom.
American Express beats as card member spending jumps
Business Insider - Apr 19, 2017
(Reuters) - American Express Co on Wednesday posted a better-than-expected first-quarter profit, helped in part by higher spending by card members, and the company's shares rose 2.3 percent in trading after the bell. AmEx's net income attributable to ...
American Express (AXP) Soars on Q1 Earnings and Revenue Beat - Nasdaq
AmEx profit beats as higher spending blunts partnership losses - Reuters
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for AXP to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate AXP's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$79.25 Current Price

$62.39 Growth Price (DCF)

Overvalued by 21.28%


Growth Rate Assumed by Market: 3.42%


Future Free Cash Flow Growth Rate: -5.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$115.02 Stability Price (EPV)

Undervalued by 45.14%


Discount Rate: 15.0%

$80.15 Book Price

Fairly valued


Poor Cash Return on Invested Capital over the past 5 years

AXP has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

AXP has only created $3.84 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 4.39B 4.75B 4.71B 9.63B 6.85B
divided by
Invested Capital 153.14B 153.38B 159.10B 161.18B 158.89B
Cash ROIC 2.87% 3.10% 2.96% 5.98% 4.31%

Excellent Return on Equity over the past 5 years

Over the past 5 years, AXP has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

AXP has generated $26.21 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 4.48B 5.36B 5.89B 5.16B 5.41B
divided by
Stockholders' Equity 18.89B 19.50B 20.67B 20.67B 20.50B
Return on Equity 23.73% 27.49% 28.47% 24.97% 26.38%

Excellent Business Performance over the past 10 years

AXP has been able to maintain profitability in good times and bad. This could mean AXP has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

AXP has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 8.48B 8.67B 5.61B 8.40B 10.48B 4.39B 4.75B 4.71B 9.63B 6.85B

Weak Balance Sheet

AXP's financial position is not ideal. The key is to check whether AXP is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash - - - - - - - - - -
Current Assets - - - - - - - - - -
Total Assets 149.83B 126.07B 124.09B 147.04B 153.34B 153.14B 153.38B 159.10B 161.18B 158.89B
Current Liabilities - - - - - - - - - -
Total Liabilities 138.80B 114.23B 109.68B 130.81B 134.54B 134.25B 133.88B 138.43B 140.51B 138.39B
Stockholder' Equity 11.03B 11.84B 14.41B 16.23B 18.79B 18.89B 19.50B 20.67B 20.67B 20.50B
Current Ratio - - - - - - - - - -
TL-to-TA 0.93 0.91 0.88 0.89 0.88 0.88 0.87 0.87 0.87 0.87

Consistent Reinvestment of Profits over the past 10 years

AXP has consistently retained profits. This may put AXP in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, AXP can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 1.08B 2.72B 3.74B 4.97B 7.22B 7.53B 8.51B 9.51B 9.67B 10.37B
Retained Earnings Growth - 152.93% 37.44% 33.05% 45.23% 4.21% 13.05% 11.83% 1.60% 7.30%

Potential Competitive Advantage over the past 10 years

AXP potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$14.39 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 4.01B 2.70B 2.13B 4.06B 4.94B 4.48B 5.36B 5.89B 5.16B 5.41B
divided by
Revenue 27.73B 28.37B 24.52B 27.82B 29.96B 31.58B 32.97B 34.29B 32.82B 32.12B
Net Profit Margin 14.47% 9.52% 8.69% 14.58% 16.47% 14.19% 16.25% 17.16% 15.73% 16.84%

Weak Pricing Power over the past 10 years

AXP is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that AXP has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $- of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit - - - - - - - - - -
divided by
Revenue 27.73B 28.37B 24.52B 27.82B 29.96B 31.58B 32.97B 34.29B 32.82B 32.12B
Gross Margin - - - - - - - - - -

Low Capital Intensity over the past 10 years

AXP has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that AXP may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

24.58% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure - - 772.00M 887.00M - 1.05B 1.01B 1.20B 1.34B 1.38B
divided by
Net Income 4.01B 2.70B 2.13B 4.06B 4.94B 4.48B 5.36B 5.89B 5.16B 5.41B
Capital Expenditure Ratio - - 36.24% 21.86% - 23.49% 18.77% 20.31% 25.97% 25.43%

Very Strong Dividend History over the past 10 years

AXP has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests AXP is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 712.00M 836.00M 924.00M 867.00M 861.00M 902.00M 939.00M 1.04B 1.17B 1.21B
divided by
Shares Outstanding 1.20B 1.16B 1.17B 1.20B 1.18B 1.14B 1.09B 1.05B 1.00B 935.00M
Dividend Paid Per Share 0.60 0.72 0.79 0.73 0.73 0.79 0.86 0.99 1.17 1.29
Price at Year End 46.51 16.75 39.30 41.69 46.99 56.67 89.59 94.27 70.16 74.08
Dividend Yield 1.28% 4.31% 2.01% 1.74% 1.55% 1.39% 0.96% 1.05% 1.67% 1.74%

Strong History of Stock Buybacks over the past 10 years

AXP has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 1.20B 1.16B 1.17B 1.20B 1.18B 1.14B 1.09B 1.05B 1.00B 935.00M
Stock Bought Back - 3.37% -1.20% -2.01% 0.93% 3.77% 4.78% 3.62% 4.79% 7.27%
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