uploads///Rel val

Why American Express Has Premium Valuations

By

Dec. 22 2017, Updated 7:30 a.m. ET

Premium valuations

On an NTM (next 12-month) basis, American Express (AXP) has a PB (price-to-book) ratio of 3.92x. The average for its peers is 2.16x. Green Dot (GDOT), Capital One Financial (COF), and Synchrony Financial (SYF) have PB ratios on an NTM basis of 3.74x, 0.88x, and 1.88x, respectively.

American Express has reported strong 3Q17 results, which can be considered a valid reason for its higher valuations. Strong 3Q17 results show that the company has been working hard to recover from the Costco (COST) breakup.

Article continues below advertisement

Positive view on valuations

American Express (AXP) could witness an increase in valuations in the coming months since it has sealed the deal with Marriott International (MAR) for its credit card program. AXP declared a quarterly dividend of $0.35 per share on November 28, 2017, which will be paid on February 9, 2018.

Stephen Squeri, American Express’s new chief executive officer on February 1, 2018, has a positive view of the company’s long-term perspective, which could also improve the company’s valuations.

American Express has a PB ratio on an LTM (last 12-month) basis of 4.07x. Peers (XLF) Synchrony Financial (SYF), Green Dot (GDOT), and Capital One Financial (COF) have PB ratios of 2.04x, 4.19x, and 0.93x, respectively, on an LTM basis.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.