This week CapitalCube examines American Express Co. (NYSE:AXP) which has teamed up with Wal-Mart Stores Inc. (NYSE:WMT) to provide low-income shoppers with a pre-paid debit card called Bluebird. AXP stock gained 26 cents yesterday while WMT stock closed 12 cents higher.
CapitalCube analyzes American Express Co. (NYSE:AXP) relative to its peers which include: JPMorgan Chase & Co.(JPM), Visa Inc. (V), Citigroup Inc.(C), Bank of America Corp.(BAC), MasterCard Inc. Cl A (MA), Capital One Financial Corp. (COF), Discover Financial Services (DFS), and Cielo S/A (CIEL3). AXP stock scores 83 for its Fundamental Analysis relative to peers. For more on CapitalCube’s scoring system
Relative Valuation
Valuation Drivers
Operations Diagnostic
Earnings Leverage
Sustainability of Returns
Growth Expectations
Capital Investment Strategy
Company numbers are TTM (trailing twelve months) or latest available. Share price data is previous day’s close unless otherwise stated.
Relative underperformance over the last year and the last month suggest a lagging position.
Drivers of Valuation: Operations or Expectations?
Valuation (P/B) = Operating Advantage (ROE) * Growth Expectations (P/E)
AXP-US has an Outperforming profile relative to peers.
Operations Diagnostic
AXP-US’s median net profit margins and relatively high capital efficiency give it some operating leverage.
Earnings Leverage
Year-on-year change in revenues and earnings are above the median among its peers.
Sustainability of Returns
Growth Expectations
The stock price is likely factoring in some chance for a strategic play.
Capital Investment Strategy
AXP-US seems to be under-investing in a business with above median returns.
Key Valuation Items
Company | Market Cap(mn) | Price / Book | Price / Earnings | Dividend Yield (%) |
---|---|---|---|---|
JPMorgan Chase & Co. | 158,446.0 | 0.9 | 9.5 | 2.6 |
Visa Inc. | 113,774.0 | 4.3 | 103.0 | 0.6 |
Citigroup Inc. | 101,962.0 | 0.6 | 10.1 | 0.1 |
Bank of America Corp. | 100,441.0 | 0.5 | 10.0 | 0.4 |
MasterCard Inc. Cl A | 59,312.9 | 9.5 | 28.4 | 0.2 |
Capital One Financial Corp. | 34,270.2 | 0.9 | 9.9 | 0.3 |
Discover Financial Services | 20,387.9 | 2.2 | 9.3 | 0.9 |
Cielo S/A | 17,112.5 | 16.0 | 16.7 | 2.0 |
American Express Co. | 66,386.5 | 3.4 | 13.7 | 1.3 |
Peer Median | 66,386.5 | 2.2 | 10.1 | 0.6 |
Best In Class | 158,446.0 | 16.0 | 103.0 | 2.6 |
Revenues & Margins
Company | Revenues (mn) | Operating Margin (%) | Pre-Tax Margin (%) | Net Margin (%) |
---|---|---|---|---|
JPMorgan Chase & Co. | 94,200.0 | 30.0 | 26.8 | 18.7 |
Visa Inc. | 10,073.0 | 60.3 | 19.6 | 13.5 |
Citigroup Inc. | 77,257.0 | 20.3 | 18.0 | 13.6 |
Bank of America Corp. | 96,028.0 | 15.0 | 14.3 | 11.8 |
MasterCard Inc. Cl A | 7,117.0 | 50.1 | 42.0 | 29.8 |
Capital One Financial Corp. | 17,997.0 | 19.3 | 21.7 | 16.4 |
Discover Financial Services | 8,794.9 | 35.5 | 42.2 | 26.0 |
Cielo S/A | 2,688.1 | 51.5 | 65.8 | 43.8 |
American Express Co. | 33,163.0 | 20.6 | 21.4 | 15.1 |
Peer Median | 17,997.0 | 30.0 | 21.7 | 16.4 |
Best In Class | 96,028.0 | 60.3 | 65.8 | 43.8 |
Key Assets (% of Revenues)
Company | Capital (%) | Goodwill & Intangibles(%) | Cash & Equivalents (%) | Excess Cash DSO* |
---|---|---|---|---|
JPMorgan Chase & Co. | 2,431.2 | 61.6 | N/A | N/A |
Visa Inc. | 259.7 | 229.5 | 74.2 | 244.2 |
Citigroup Inc. | 2,480.6 | 43.7 | N/A | N/A |
Bank of America Corp. | 2,250.2 | 86.6 | N/A | N/A |
MasterCard Inc. Cl A | 88.0 | 23.4 | 79.8 | 286.9 |
Capital One Financial Corp. | 1,647.9 | 94.0 | N/A | N/A |
Discover Financial Services | 325.7 | 5.4 | 74.4 | 271.9 |
Cielo S/A | 47.9 | 4.3 | 5.8 | 15.2 |
American Express Co. | 237.5 | 0.0 | 69.8 | 267.5 |
* Excess Cash = Cash & Eqvts – 2%*Revenue |
Key Liquidity Items
Company | Debt/Enterprise Value (%) | Interest Coverage (x) | Cash Flow To Total Debt (%) |
---|---|---|---|
JPMorgan Chase & Co. | 20.7 | 4.6 | 5.4 |
Visa Inc. | 0.0 | 202.6 | 999.0 |
Citigroup Inc. | 24.0 | 1.5 | 4.9 |
Bank of America Corp. | 24.7 | 1.3 | 0.2 |
MasterCard Inc. Cl A | 0.0 | 162.0 | 999.0 |
Capital One Financial Corp. | 11.1 | 3.5 | 17.6 |
Discover Financial Services | 20.0 | 3.2 | 15.0 |
Cielo S/A | 0.7 | 253.2 | 927.0 |
American Express Co. | 25.7 | 3.8 | 14.1 |
Peer Median | 20.0 | 3.8 | 15.0 |
Best In Class | 0.0 | 253.2 | 999.0 |
Key Cash Flow Items (% of Revenues)
Company | Operating Cash Flow (%) | Capex (%) | Interest Expense (%) | Dividends (%) |
---|---|---|---|---|
JPMorgan Chase & Co. | 55.5 | 0.0 | 6.6 | 4.1 |
Visa Inc. | 44.8 | 3.5 | 0.3 | 4.2 |
Citigroup Inc. | 81.7 | 4.8 | 13.6 | 0.1 |
Bank of America Corp. | 16.7 | 1.4 | 11.4 | 0.4 |
MasterCard Inc. Cl A | 40.2 | 1.2 | 0.3 | 1.1 |
Capital One Financial Corp. | 34.7 | 2.3 | 5.6 | 0.5 |
Discover Financial Services | 31.0 | 1.7 | 11.1 | 1.2 |
Cielo S/A | 29.8 | 3.8 | 0.2 | 31.3 |
American Express Co. | 38.7 | 3.4 | 5.4 | 2.6 |