American Express AXP
What does American Express do?
American Express is an integrated payments company headquartered in the United States. The company issues credit and charge cards for individuals, self-employed people and corporate customers, and complements them with travel, dining and lifestyle benefits as well as expense management. It also offers banking products such as deposits and lending outside the card business.
The business is divided into the segments U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services. Revenue comes from merchant fees on accepted card transactions, cardholder annual fees, interest income on card receivables and fees for additional services. As both card issuer and network operator, the company controls the entire payment flow. Competitively, it faces Visa, Mastercard, large banks as card issuers and digital payment providers. It positions itself in the premium segment with high-income customers, rewards programs and close customer relationships.
Score profile
Rank vs. Credit Services (29 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, American Express ranks in the middle in the group Credit Services (5.5/10). On growth, the company ranks above average in the group Credit Services (6.4/10). On valuation (higher = cheaper), the stock ranks below average in the group Credit Services (2.2/10). On financial strength, American Express ranks above average in the group Credit Services (6.6/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 16.0x | 9.2x | better than 26 % |
| Trailing P/E | 18.2x | 12.0x | better than 31 % |
| PEG ratio | 1.3x | 0.8x | better than 33 % |
| Price/sales | 3.0x | 1.7x | better than 29 % |
| Price/book | 6.1x | 1.8x | better than 9 % |
| Revenue growth | 11.3% | 6.2% | better than 57 % |
| Earnings growth | 30.9% | 8.0% | better than 71 % |
| Gross margin | 62.0% | 70.1% | better than 43 % |
| Operating margin | 18.4% | 20.9% | better than 47 % |
| Net margin | 16.8% | 16.8% | better than 50 % |
| Return on equity | 35.9% | 15.9% | better than 81 % |
| Debt/equity | 167.6% | 149.4% | better than 48 % |
| Current ratio | 1.6x | 3.5x | better than 38 % |
| Free cash flow yield | 0.0% | 0.0% | better than 33 % |
| Dividend yield | 1.2% | 1.6% | – |
| Payout ratio | 15.3% | 19.1% | – |
| Beta | 1.08 | 1.18 | – |
Valuation: what is American Express worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give American Express a model range of 186.80 USD to 186.80 USD per share.
24 analysts, average rating “Buy”, average price target 364.79 USD (+12.8%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Card spending volume largely determines merchant fees and thus a large share of revenue.
- Annual fees and rewards programs secure recurring income and retain affluent customers over the long term.
- Interest income on card receivables depends on loan volume, interest rate levels and the quality of the credit portfolio.
Risks
- Economic downturns can reduce consumer spending and increase credit losses in consumer and corporate portfolios.
- Regulation of merchant fees, interest rates and card fees can weigh on the earnings base of the business model.
- High costs for rewards and marketing, as well as new payment providers, increase competitive pressure.
What to look for with American Express
The credit loss rate shows how well the company manages credit risk and, alongside card spending volume, is central to earnings quality.