American Express Rebounding With Credit

NEW YORK (TheStreet) -- Whether you're reading this before or after American Express (AXP) announces their latest quarterly earnings, you'll find this company a compelling investment.

They're certainly not impeccable. AXP announced on Oct. 1 that it would have to pay $112 million to settle charges by the government that it had engaged in deceptive practices. Although I'm glad they were held responsible, they are by no means alone over the past two decades in those kinds of business practices.

This multifaceted financial company has cleaned up its act and sharpened its focus on what they do best. AXP doesn't only provide charge and credit payment card products and travel-related services to customers worldwide.

Their product portfolio also consists of expense management products and services, consumer and business travel services and stored value products, including traveler's cheques and other prepaid financial products.

They make money with network services like merchant acquisition and processing, servicing and settlement, as well as point-of-sale, marketing and information products and services for merchants.

They also ring the register with fee services comprising market and trend analyses and related consulting services, fraud prevention services and the design of customer loyalty and rewards programs. AXP is an innovative company that's always looking for a new approach to expand earnings.

That's why they announced last week a partnership arrangement with none other than Walmart (WMT). Hopefully management will give us more details on the conference call Wednesday evening.

So far the gist is that the companies are providing a prepaid debit card called Bluebird which then can be used as an alternative to more conventional bank credit cards. IF WMT signs off on it we should anticipate a smooth beginning and plenty of additional revenue for AXP.

The chart below illustrates the seamless correlation between the upside one-year movement of AXP's stock price and their impressive price-to-earnings-to-growth ratio.

AXP data by YCharts

As of the end of their last quarter their PEG ratio (5-year expected) was a modest 1.23 and their forward price-to-earnings ratio stood at 12.51. Analysts' consensus on AXP's 12-month upside stock price potential of around $62.57 would translate to a 5% higher share price from current levels.

1 2 Next › Last »