Critical Review: American Express (AXP) and Its Competitors

American Express (NYSE:AXP) is one of 120 publicly-traded companies in the “Consumer Finance” industry, but how does it weigh in compared to its peers? We will compare American Express to similar companies based on the strength of its valuation, risk, analyst recommendations, profitability, dividends, earnings and institutional ownership.

Insider and Institutional Ownership

84.3% of American Express shares are owned by institutional investors. Comparatively, 45.7% of shares of all “Consumer Finance” companies are owned by institutional investors. 0.1% of American Express shares are owned by company insiders. Comparatively, 22.0% of shares of all “Consumer Finance” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares American Express and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
American Express	$72.23 billion	$10.83 billion	18.10
American Express Competitors	$3.62 billion	$385.17 million	4.55

American Express has higher revenue and earnings than its peers. American Express is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

American Express pays an annual dividend of $3.80 per share and has a dividend yield of 1.2%. American Express pays out 21.4% of its earnings in the form of a dividend. As a group, “Consumer Finance” companies pay a dividend yield of 6.1% and pay out 34.3% of their earnings in the form of a dividend. American Express has increased its dividend for 4 consecutive years.

Risk and Volatility

American Express has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, American Express’ peers have a beta of 1.26, suggesting that their average share price is 26% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for American Express and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Express	1	12	17	1	2.58
American Express Competitors	896	3366	5299	276	2.50

American Express presently has a consensus target price of $365.42, suggesting a potential upside of 13.69%. As a group, “Consumer Finance” companies have a potential upside of 20.97%. Given American Express’ peers higher possible upside, analysts plainly believe American Express has less favorable growth aspects than its peers.

Profitability

This table compares American Express and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Express	15.80%	34.19%	3.83%
American Express Competitors	10.42%	-15.79%	2.02%

Summary

American Express beats its peers on 11 of the 15 factors compared.

American Express Company Profile

American Express Company is a global payments and financial services company that operates a card-issuing business and a payments network. Its products and services include consumer, small-business and corporate cards, payment processing, lending, travel services and expense-management solutions. Founded in 1850 as an express mail business, the company expanded into financial services and became known for its charge cards and travel-related services. Today, it serves cardholders and businesses in the United States and markets around the world, connecting customers, merchants and financial institutions through its network.