Today we're going to take a closer look at Large-Cap Finance company American Express, whose shares are currently trading at $344.29. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
The Market May Be Overvaluing American Express's Earnings and Assets:
American Express Company, together with its subsidiaries, operates as integrated payments company in the United States, Europe, the Middle East and Africa, the Asia Pacific, Australia, New Zealand, Latin America, Canada, the Caribbean, and Internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 15.92 and an average price to book (P/B) ratio of 1.78. In contrast, American Express has a trailing 12 month P/E ratio of 23.1 and a P/B ratio of 7.32.
American Express has moved 28.0% over the last year compared to 13.8% for the S&P 500 — a difference of 14.2%. American Express has a 52 week high of $349.19 and a 52 week low of $220.43.
Strong Revenue Growth and Generally Positive Cash Flows:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $43,556 | $36,087 | $42,380 | $52,862 | $60,515 | $65,949 |
| Interest Income (M) | $8,620 | $7,985 | $7,750 | $9,895 | $13,134 | $15,543 |
| Operating Margins | 19% | 12% | 25% | 18% | 17% | 20% |
| Net Margins | 16% | 9% | 19% | 14% | 14% | 15% |
| Net Income (M) | $6,759 | $3,135 | $8,060 | $7,514 | $8,374 | $10,129 |
| Depreciation & Amort. (M) | $1,188 | $1,543 | $1,695 | $1,626 | $1,651 | $1,676 |
| Diluted Shares (M) | 830 | 806 | 790 | 752 | 736 | 713 |
| Earnings Per Share | $7.99 | $3.77 | $10.02 | $9.85 | $11.21 | $14.01 |
| EPS Growth | n/a | -52.82% | 165.78% | -1.7% | 13.81% | 24.98% |
| Avg. Price | $109.76 | $100.06 | $152.71 | $168.28 | $187.34 | $346.62 |
| P/E Ratio | 13.72 | 26.54 | 15.21 | 17.07 | 16.68 | 24.69 |
| Free Cash Flow (M) | $11,987 | $4,113 | $13,095 | $19,224 | $16,996 | $12,139 |
| CAPEX (M) | $1,645 | $1,478 | $1,550 | $1,855 | $1,563 | $1,911 |
| EV / EBITDA | 13.1 | 15.56 | 11.28 | 12.17 | 11.57 | 17.84 |
| Total Debt (M) | $57,835 | $42,952 | $38,675 | $42,573 | $47,866 | $49,715 |
| Net Debt / EBITDA | 3.47 | 1.71 | 1.34 | 0.77 | 0.1 | 0.62 |
American Express benefits from rapidly growing revenues and increasing reinvestment in the business, low leverage levels, and decent operating margins with a stable trend. The company's financial statements show positive EPS growth and generally positive cash flows.
