Definitive Analysis
Definitive Analysis

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American Express Company (AXP)

Company Dividend Discount ModelIndustry: Financial - Credit ServicesSector: Financial Services

Valuation Snapshot

Stable Growth$353.49 - $937.71$540.52
Multi-Stage$240.99 - $263.35$251.97
Blended Fair Value$396.24
Current Price$332.16
Upside19.29%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS7.05%6.74%2.862.542.242.072.112.031.891.791.731.68
YoY Growth--12.30%13.74%8.08%-1.76%3.66%7.40%5.84%3.65%2.99%12.58%
Dividend Yield--1.06%1.12%1.36%1.11%1.49%2.37%1.69%1.92%2.18%2.73%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)10,541.00
(-) Cash Dividends Paid (M)2,198.00
(=) Cash Retained (M)8,343.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)2,108.201,317.63790.58
Cash Retained (M)8,343.008,343.008,343.00
(-) Cash Required (M)-2,108.20-1,317.63-790.58
(=) Excess Retained (M)6,234.807,025.387,552.43
(/) Shares Outstanding (M)699.50699.50699.50
(=) Excess Retained per Share8.9110.0410.80
LTM Dividend per Share3.143.143.14
(+) Excess Retained per Share8.9110.0410.80
(=) Adjusted Dividend12.0613.1913.94
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$353.49$540.52$937.71
Upside / Downside6.42%62.73%182.31%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)10,541.0011,226.1711,955.8712,733.0013,560.6414,442.0814,875.35
Payout Ratio20.85%34.68%48.51%62.34%76.17%90.00%92.50%
Projected Dividends (M)2,198.003,893.415,799.937,937.8510,329.1912,997.8813,759.70

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)3,535.213,568.723,602.23
Year 2 PV (M)4,781.844,872.924,964.86
Year 3 PV (M)5,942.396,112.976,286.79
Year 4 PV (M)7,021.197,291.207,568.93
Year 5 PV (M)8,022.378,409.858,812.17
PV of Terminal Value (M)139,268.12145,994.82152,978.97
Equity Value (M)168,571.11176,250.49184,213.95
Shares Outstanding (M)699.50699.50699.50
Fair Value$240.99$251.97$263.35
Upside / Downside-27.45%-24.14%-20.72%

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