Analyzing American Express (AXP) and Its Peers

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

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	10.33%	-15.81%	1.99%

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 6.2% and pay out 34.4% of their earnings in the form of a dividend. American Express has increased its dividend for 4 consecutive years.

Valuation and Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
American Express	$72.23 billion	$10.83 billion	18.22
American Express Competitors	$3.68 billion	$385.17 million	6.19

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.

Volatility and Risk

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

Institutional and Insider Ownership

84.3% of American Express shares are held by institutional investors. Comparatively, 45.7% of shares of all “Consumer Finance” companies are held by institutional investors. 0.1% of American Express shares are held by insiders. Comparatively, 22.0% of shares of all “Consumer Finance” companies are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices 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	13	17	1	2.56
American Express Competitors	892	3355	5294	275	2.50

American Express currently has a consensus target price of $365.22, indicating a potential upside of 12.84%. As a group, “Consumer Finance” companies have a potential upside of 22.92%. Given American Express’ peers higher possible upside, analysts plainly believe American Express has less favorable growth aspects than its peers.

Summary

American Express beats its peers on 10 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.