With shares of American Express Corporation (NYSE:AXP) trading at around $57.67, is AXP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
American Express has performed well over the past year. The stock has climbed approximately 23.95 percent, and while a 1.40 percent yield is moderate at best, it’s still better than others in the industry. For example, MasterCard Incorporated (NYSE:MA) offers a .20 percent yield, Visa (NYSE:V) offers a .20 percent yield, Capital One Financial (NYSE:COF) offers a .30 percent yield, and Discover Financial Services (NYSE:DFS) offers a one percent yield. While American Express is tops in this category, it doesn’t mean it’s the best investment. There are much more important factors to consider.
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American Express has recently shown revenue growth, EPS growth, increased net income, and it sports a P/E of only 13.35 compared to an industry average of 34.20. A double-digit profit margin of 17.12 percent is also impressive. The growth estimate over the next five years is 11.13 percent, which is healthy. However, it’s not as healthy as the 13.64 percent growth estimate for the industry.
American Express doesn’t issue as many cards at MasterCard and Visa, but high-end means higher fees, which equals juicy profits. However, MasterCard and Visa has still outperformed American Express through the years by a wide margin when it comes to stock price. Let’s take a look at some other comparisons.