Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- AMERICAN EXPRESS CO has improved earnings per share by 5.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMERICAN EXPRESS CO increased its bottom line by earning $4.08 versus $3.35 in the prior year. This year, the market expects an improvement in earnings ($4.40 versus $4.08).
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Consumer Finance industry and the overall market, AMERICAN EXPRESS CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Consumer Finance industry average. The net income increased by 1.2% when compared to the same quarter one year prior, going from $1,235.00 million to $1,250.00 million.
American Express Company provides charge and credit payment card products and travel-related services to customers worldwide. American Express has a market cap of $63.2 billion and is part of the financial sector and financial services industry. The company has a P/E ratio of 12.9, below the S&P 500 P/E ratio of 17.7. Shares are up 18.2% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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