American Express (AXP:NYS) Fundamental Valuation Report

Fundamental Valuation Report

American Express(AXP:NYS)

Financial Services:Credit Services

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$106.62 (USD) 14/02/2019

Weighted Valuation
$106.55 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 0.1%

Valuation Models Analyst Consensus: $109.80 (USD)
(in order of importance) Adjusted Book Value: $96.07 (USD)
Multiples: $117.77 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (AXP:NYS USD)

Price 106.62
Range 106.24 – 107.36
52 week 89.50 – 112.89
Open 107.00
Vol / Avg. 2.36M/3.78M
Mkt cap 89.92B
P/E 13.48
Div/yield 1.48/0.01
EPS 7.91
Shares 843.37M
Beta 1.12

Company Description

American Express is a global financial institution, operating in about 130 countries, that provides consumers and businesses charge and credit card payment products. The company operates a highly profitable merchant payment network. Since 2018, the company has operated in three segments: global consumer services, global commercial services, and global merchant and network services. In addition to payment products, the company’s commercial business offers expense management tools, consulting services, and business loans.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for AXP:NYS

Using a discounted cash flow model we generated an intrinsic value of $143.09 (USD) for AXP:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

AXP:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $143.09 1% 5% 1% 5%
WACC (or Ke) 12.15 $161.03 $128.69
Terminal Growth Rate 3.00 $130.86 $158.33
Tax Rate 0.15 $151.82 $134.36
Cash Flow 15,787,379,105 $135.25 $150.93
Capital Expenditures -1,256,600,000 $142.57 $143.61
Long Term Debt 0 $143.09 $143.09

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $161.83 (USD) for AXP:NYS. We also generated a valuation of $165.34 (USD) using other metrics and comparables.
The comparable companies were Capital One Financial (COF:NYS), Discover Financial (DFS:NYS), Mastercard (MA:NYS), PayPal Holdings (PYPL:NAS) and Visa (V:NYS).

Company AXP:NYS End Date Value
Earnings/Share $7.91 (USD)
Book Value/Share $25.97 (USD)
Sales/Share $33.60 (USD)
Cash Flow/Share $17.63 (USD)
EBITDA/Share $12.88 (USD)
Price Based on Comps Adjustment Factor (%)
$212.17 (USD) -31.2
$131.91 (USD) -10.4
$268.52 (USD) -32.2
$228.53 (USD) -33.3
$0.00 (USD) -21.3
AXP:NYS Ratios Used Average Values COF:NYS DFS:NYS MA:NYS PYPL:NAS V:NYS
12.98 PE Ratio 26.82 6.81 8.66 37.70 51.91 29.03
3.95 PB Ratio 12.10 0.73 2.14 40.19 6.77 10.68
3.06 PS Ratio 7.99 1.39 2.17 14.79 6.91 14.70
5.83 PCF Ratio 17.10 2.97 3.85 35.52 19.47 23.67
0.00 EV to EBITDA 26.29 0.00 0.00 27.36 29.59 21.91

Multiples

Using a multiples approach we generated a valuation of  $117.77 (USD) for AXP:NYS

Company AXP:NYS End Date Value
Earnings/Share $7.91 (USD)
Book Value/Share $25.97 (USD)
Sales/Share $33.60 (USD)
Cash Flow/Share $17.63 (USD)
EBITDA/Share $12.88 (USD)
Price Based on Comps Adjustment Factor
$115.04 (USD) 0
$95.14 (USD) 0
$82.61 (USD) 0
$132.65 (USD) 0
$163.43 (USD) 0
Ratios Ratio Average
PE Ratio 14.54
PB Ratio 3.66
PS Ratio 2.46
PCF Ratio 7.53
EV to EBITDA 12.69

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  AXP:NYS for the last 10 years was  3.65

We ran the Adjusted Book Value for  AXP:NYS and generated a book value of  $26.32 (USD)
By multiplying these we get an adjusted valuation of  $96.07 (USD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for AXP:NYS. The 5 analysts have a concensus valuation for AXP:NYS for 2019 of $109.80 (USD).

AXP:NYS American Express

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 3 1 3.5714 Outperform 2019-2-13

Current Price: 106.62 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 8.15 8.88
# EPS Analysts 7 4
Mean Revenue 41,860.80 46,169.00
# Revenue Analysts 4 2
Mean Target Price 109.80
Mean Cash Flow 9.24 10.15
Mean EBITDA
Mean Net Income 6,774.10 7,122.20
Mean Debt Outstanding
Mean Tax Rate 22.00
Mean Growth Rate 31.90
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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