Is American Express Company (AXP) overvalued?
On Equity Rank's model estimate, AXP trades 78% above its fair value. American Express Company (AXP) last closed at $320.99; the multi-method model fair value is $180.37.
| Price | Model fair value | Price vs model |
|---|---|---|
| $320.99 | $180.37 | 78% above |
What the answer rests on
- 1 of 10 valuation methods put AXP's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, AXP's free cash flow would need to grow about 1.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -5.9% a year.
- AXP trades at 18.7 times its last year's earnings, against a median of 17.4 for 95 profitable Financials companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 66% above to 139% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind AXP's fair value · What prices assume · Other companies