Intrinsic value of American Express - AXP

Previous Close

$92.38

  Intrinsic Value

$89.24

stock screener

  Rating & Target

hold

-3%

Previous close

$92.38

 
Intrinsic value

$89.24

 
Up/down potential

-3%

 
Rating

hold

Our model is not good at valuating stocks of financial companies, such as AXP.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AXP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 81.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.73
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  32,717
  35,694
  38,796
  42,024
  45,382
  48,871
  52,498
  56,267
  60,184
  64,255
  68,489
  72,892
  77,474
  82,245
  87,215
  92,393
  97,793
  103,426
  109,304
  115,442
  121,854
  128,554
  135,558
  142,883
  150,547
  158,566
  166,961
  175,752
  184,958
  194,603
  204,709
Variable operating expenses, $m
 
  27,172
  29,508
  31,939
  34,467
  37,096
  39,827
  42,665
  45,614
  48,680
  51,868
  54,892
  58,342
  61,935
  65,677
  69,577
  73,643
  77,885
  82,312
  86,934
  91,762
  96,808
  102,082
  107,599
  113,370
  119,409
  125,731
  132,350
  139,283
  146,547
  154,157
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  24,621
  27,172
  29,508
  31,939
  34,467
  37,096
  39,827
  42,665
  45,614
  48,680
  51,868
  54,892
  58,342
  61,935
  65,677
  69,577
  73,643
  77,885
  82,312
  86,934
  91,762
  96,808
  102,082
  107,599
  113,370
  119,409
  125,731
  132,350
  139,283
  146,547
  154,157
Operating income, $m
  8,096
  8,522
  9,288
  10,085
  10,914
  11,776
  12,672
  13,602
  14,569
  15,575
  16,620
  18,000
  19,132
  20,310
  21,537
  22,816
  24,150
  25,541
  26,992
  28,508
  30,091
  31,746
  33,476
  35,285
  37,177
  39,157
  41,231
  43,401
  45,675
  48,057
  50,552
EBITDA, $m
  9,191
  9,577
  10,410
  11,276
  12,177
  13,113
  14,086
  15,097
  16,148
  17,241
  18,377
  19,558
  20,788
  22,068
  23,401
  24,791
  26,239
  27,751
  29,328
  30,975
  32,695
  34,493
  36,372
  38,338
  40,394
  42,546
  44,798
  47,157
  49,627
  52,215
  54,927
Interest expense (income), $m
  1,700
  3,661
  4,095
  4,544
  5,011
  5,497
  6,002
  6,526
  7,072
  7,638
  8,227
  8,840
  9,477
  10,140
  10,830
  11,549
  12,298
  13,079
  13,894
  14,744
  15,632
  16,560
  17,529
  18,542
  19,602
  20,711
  21,871
  23,085
  24,357
  25,689
  27,084
Earnings before tax, $m
  8,096
  4,861
  5,192
  5,541
  5,903
  6,279
  6,670
  7,076
  7,498
  7,937
  8,393
  9,161
  9,655
  10,171
  10,708
  11,268
  11,852
  12,462
  13,098
  13,764
  14,459
  15,186
  15,946
  16,742
  17,575
  18,447
  19,360
  20,316
  21,318
  22,368
  23,468
Tax expense, $m
  2,688
  1,313
  1,402
  1,496
  1,594
  1,695
  1,801
  1,910
  2,024
  2,143
  2,266
  2,473
  2,607
  2,746
  2,891
  3,042
  3,200
  3,365
  3,537
  3,716
  3,904
  4,100
  4,306
  4,520
  4,745
  4,981
  5,227
  5,485
  5,756
  6,039
  6,336
Net income, $m
  5,408
  3,549
  3,790
  4,045
  4,309
  4,584
  4,869
  5,165
  5,473
  5,794
  6,127
  6,687
  7,048
  7,425
  7,817
  8,225
  8,652
  9,097
  9,562
  10,047
  10,555
  11,086
  11,641
  12,222
  12,830
  13,466
  14,132
  14,831
  15,562
  16,328
  17,132

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,278
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  158,893
  169,973
  184,743
  200,116
  216,103
  232,721
  249,991
  267,938
  286,589
  305,977
  326,136
  347,105
  368,926
  391,644
  415,308
  439,969
  465,681
  492,503
  520,496
  549,724
  580,255
  612,160
  645,514
  680,396
  716,889
  755,078
  795,054
  836,913
  880,754
  926,681
  974,805
Adjusted assets (=assets-cash), $m
  155,615
  169,973
  184,743
  200,116
  216,103
  232,721
  249,991
  267,938
  286,589
  305,977
  326,136
  347,105
  368,926
  391,644
  415,308
  439,969
  465,681
  492,503
  520,496
  549,724
  580,255
  612,160
  645,514
  680,396
  716,889
  755,078
  795,054
  836,913
  880,754
  926,681
  974,805
Revenue / Adjusted assets
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
Average production assets, $m
  5,103
  5,568
  6,052
  6,556
  7,080
  7,624
  8,190
  8,778
  9,389
  10,024
  10,684
  11,371
  12,086
  12,830
  13,605
  14,413
  15,256
  16,134
  17,051
  18,009
  19,009
  20,054
  21,147
  22,290
  23,485
  24,736
  26,046
  27,417
  28,853
  30,358
  31,935
Working capital, $m
  0
  17,847
  19,398
  21,012
  22,691
  24,436
  26,249
  28,133
  30,092
  32,128
  34,244
  36,446
  38,737
  41,123
  43,607
  46,197
  48,897
  51,713
  54,652
  57,721
  60,927
  64,277
  67,779
  71,442
  75,273
  79,283
  83,481
  87,876
  92,479
  97,302
  102,355
Total debt, $m
  107,868
  117,012
  129,833
  143,176
  157,053
  171,478
  186,468
  202,046
  218,235
  235,064
  252,562
  270,763
  289,704
  309,423
  329,964
  351,369
  373,688
  396,969
  421,267
  446,637
  473,137
  500,831
  529,782
  560,060
  591,735
  624,883
  659,583
  695,916
  733,970
  773,835
  815,607
Total liabilities, $m
  138,392
  147,536
  160,357
  173,700
  187,577
  202,002
  216,992
  232,570
  248,759
  265,588
  283,086
  301,287
  320,228
  339,947
  360,488
  381,893
  404,212
  427,493
  451,791
  477,161
  503,661
  531,355
  560,306
  590,584
  622,259
  655,407
  690,107
  726,440
  764,494
  804,359
  846,131
Total equity, $m
  20,501
  22,436
  24,386
  26,415
  28,526
  30,719
  32,999
  35,368
  37,830
  40,389
  43,050
  45,818
  48,698
  51,697
  54,821
  58,076
  61,470
  65,010
  68,706
  72,564
  76,594
  80,805
  85,208
  89,812
  94,629
  99,670
  104,947
  110,472
  116,259
  122,322
  128,674
Total liabilities and equity, $m
  158,893
  169,972
  184,743
  200,115
  216,103
  232,721
  249,991
  267,938
  286,589
  305,977
  326,136
  347,105
  368,926
  391,644
  415,309
  439,969
  465,682
  492,503
  520,497
  549,725
  580,255
  612,160
  645,514
  680,396
  716,888
  755,077
  795,054
  836,912
  880,753
  926,681
  974,805
Debt-to-equity ratio
  5.262
  5.220
  5.320
  5.420
  5.510
  5.580
  5.650
  5.710
  5.770
  5.820
  5.870
  5.910
  5.950
  5.990
  6.020
  6.050
  6.080
  6.110
  6.130
  6.160
  6.180
  6.200
  6.220
  6.240
  6.250
  6.270
  6.280
  6.300
  6.310
  6.330
  6.340
Adjusted equity ratio
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,408
  3,549
  3,790
  4,045
  4,309
  4,584
  4,869
  5,165
  5,473
  5,794
  6,127
  6,687
  7,048
  7,425
  7,817
  8,225
  8,652
  9,097
  9,562
  10,047
  10,555
  11,086
  11,641
  12,222
  12,830
  13,466
  14,132
  14,831
  15,562
  16,328
  17,132
Depreciation, amort., depletion, $m
  1,095
  1,055
  1,122
  1,191
  1,262
  1,337
  1,415
  1,495
  1,579
  1,666
  1,756
  1,558
  1,656
  1,758
  1,864
  1,974
  2,090
  2,210
  2,336
  2,467
  2,604
  2,747
  2,897
  3,053
  3,217
  3,389
  3,568
  3,756
  3,953
  4,159
  4,375
Funds from operations, $m
  8,797
  4,604
  4,912
  5,236
  5,572
  5,921
  6,284
  6,660
  7,052
  7,460
  7,883
  8,245
  8,704
  9,182
  9,680
  10,200
  10,742
  11,307
  11,898
  12,514
  13,159
  13,833
  14,538
  15,275
  16,047
  16,855
  17,700
  18,586
  19,514
  20,487
  21,506
Change in working capital, $m
  573
  1,489
  1,551
  1,614
  1,679
  1,745
  1,813
  1,884
  1,958
  2,036
  2,117
  2,202
  2,291
  2,385
  2,485
  2,589
  2,700
  2,816
  2,939
  3,069
  3,206
  3,350
  3,502
  3,663
  3,832
  4,010
  4,198
  4,395
  4,603
  4,822
  5,053
Cash from operations, $m
  8,224
  3,116
  3,361
  3,621
  3,893
  4,176
  4,470
  4,776
  5,094
  5,424
  5,767
  6,043
  6,413
  6,797
  7,196
  7,610
  8,042
  8,491
  8,958
  9,446
  9,953
  10,483
  11,036
  11,613
  12,215
  12,845
  13,503
  14,191
  14,911
  15,665
  16,453
Maintenance CAPEX, $m
  0
  -699
  -763
  -829
  -898
  -970
  -1,044
  -1,122
  -1,202
  -1,286
  -1,373
  -1,464
  -1,558
  -1,656
  -1,758
  -1,864
  -1,974
  -2,090
  -2,210
  -2,336
  -2,467
  -2,604
  -2,747
  -2,897
  -3,053
  -3,217
  -3,389
  -3,568
  -3,756
  -3,953
  -4,159
New CAPEX, $m
  -1,375
  -466
  -484
  -504
  -524
  -544
  -566
  -588
  -611
  -635
  -660
  -687
  -715
  -744
  -775
  -808
  -842
  -879
  -917
  -958
  -1,000
  -1,045
  -1,093
  -1,143
  -1,195
  -1,251
  -1,310
  -1,371
  -1,436
  -1,505
  -1,577
Cash from investing activities, $m
  1,868
  -1,165
  -1,247
  -1,333
  -1,422
  -1,514
  -1,610
  -1,710
  -1,813
  -1,921
  -2,033
  -2,151
  -2,273
  -2,400
  -2,533
  -2,672
  -2,816
  -2,969
  -3,127
  -3,294
  -3,467
  -3,649
  -3,840
  -4,040
  -4,248
  -4,468
  -4,699
  -4,939
  -5,192
  -5,458
  -5,736
Free cash flow, $m
  10,092
  1,951
  2,115
  2,289
  2,471
  2,662
  2,860
  3,066
  3,280
  3,503
  3,733
  3,893
  4,140
  4,397
  4,663
  4,939
  5,225
  5,522
  5,831
  6,152
  6,486
  6,834
  7,196
  7,573
  7,966
  8,377
  8,805
  9,252
  9,719
  10,207
  10,718
Issuance/(repayment) of debt, $m
  -136
  12,422
  12,821
  13,343
  13,877
  14,425
  14,991
  15,578
  16,189
  16,828
  17,498
  18,201
  18,941
  19,720
  20,540
  21,406
  22,318
  23,282
  24,298
  25,370
  26,501
  27,694
  28,952
  30,278
  31,675
  33,148
  34,699
  36,333
  38,054
  39,865
  41,771
Issuance/(repurchase) of shares, $m
  -4,254
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -6,325
  12,422
  12,821
  13,343
  13,877
  14,425
  14,991
  15,578
  16,189
  16,828
  17,498
  18,201
  18,941
  19,720
  20,540
  21,406
  22,318
  23,282
  24,298
  25,370
  26,501
  27,694
  28,952
  30,278
  31,675
  33,148
  34,699
  36,333
  38,054
  39,865
  41,771
Total cash flow (excl. dividends), $m
  3,653
  14,373
  14,936
  15,632
  16,348
  17,086
  17,851
  18,644
  19,470
  20,331
  21,231
  22,094
  23,081
  24,116
  25,203
  26,344
  27,543
  28,804
  30,129
  31,522
  32,987
  34,527
  36,147
  37,851
  39,641
  41,525
  43,504
  45,585
  47,773
  50,073
  52,489
Retained Cash Flow (-), $m
  172
  -1,935
  -1,950
  -2,029
  -2,110
  -2,194
  -2,280
  -2,369
  -2,462
  -2,559
  -2,661
  -2,768
  -2,880
  -2,999
  -3,124
  -3,255
  -3,394
  -3,541
  -3,695
  -3,858
  -4,030
  -4,211
  -4,403
  -4,604
  -4,817
  -5,041
  -5,277
  -5,525
  -5,787
  -6,062
  -6,352
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,438
  12,986
  13,603
  14,238
  14,893
  15,571
  16,275
  17,008
  17,772
  18,570
  19,326
  20,201
  21,117
  22,079
  23,089
  24,149
  25,263
  26,434
  27,664
  28,957
  30,316
  31,744
  33,246
  34,825
  36,484
  38,227
  40,060
  41,986
  44,010
  46,137
Discount rate, %
 
  12.60
  13.23
  13.89
  14.59
  15.32
  16.08
  16.89
  17.73
  18.62
  19.55
  20.52
  21.55
  22.63
  23.76
  24.95
  26.19
  27.50
  28.88
  30.32
  31.84
  33.43
  35.10
  36.86
  38.70
  40.64
  42.67
  44.80
  47.04
  49.39
  51.86
PV of cash for distribution, $m
 
  11,046
  10,129
  9,208
  8,259
  7,304
  6,364
  5,460
  4,609
  3,823
  3,115
  2,479
  1,942
  1,489
  1,117
  818
  584
  406
  275
  181
  115
  71
  42
  24
  14
  7
  4
  2
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

American Express Company, together with its subsidiaries, is a global services company. The Company's principal products and services are charge and credit card products, and travel-related services, which are offered to consumers and businesses around the world. Its segments include the U.S. Consumer Services (USCS), International Consumer and Network Services (ICNS), Global Commercial Services (GCS) and Global Merchant Services (GMS). The USCS includes the U.S. Consumer Card Services business and consumer travel services in the United States. The ICNS includes the International Consumer Card Services business, Global Network Services business and consumer travel services outside the United States. The GCS includes the Global Corporate Payments business, small business services businesses in the United States and internationally, financing products and foreign exchange services operations. The GMS includes the Global Merchant Services business and global loyalty coalition businesses.

FINANCIAL RATIOS  of  American Express (AXP)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 2.6
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 12.2
Growth Rates
Sales Growth Rate -1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.5%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 229.2%
Total Debt to Equity 526.2%
Interest Coverage 6
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 26.3%
Return On Equity - 3 Yr. Avg. 26.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 74%
Gross Margin - 3 Yr. Avg. 75%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 32.9%
Operating Margin 24.7%
Oper. Margin - 3 Yr. Avg. 24.8%
Pre-Tax Margin 24.7%
Pre-Tax Margin - 3 Yr. Avg. 24.8%
Net Profit Margin 16.5%
Net Profit Margin - 3 Yr. Avg. 16.3%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 34.2%
Payout Ratio 22.3%

AXP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AXP stock intrinsic value calculation we used $32717 million for the last fiscal year's total revenue generated by American Express. The default revenue input number comes from 2016 income statement of American Express. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AXP stock valuation model: a) initial revenue growth rate of 9.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.6%, whose default value for AXP is calculated based on our internal credit rating of American Express, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of American Express.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AXP stock the variable cost ratio is equal to 76.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AXP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for American Express.

Corporate tax rate of 27% is the nominal tax rate for American Express. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AXP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AXP are equal to 15.6%.

Life of production assets of 7.3 years is the average useful life of capital assets used in American Express operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AXP is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $20501 million for American Express - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 884.026 million for American Express is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of American Express at the current share price and the inputted number of shares is $81.7 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ [$$] AmEx Chiefs Mission: Get Millennials, Keep the Rich   [Oct-20-17 11:02PM  The Wall Street Journal]
▶ NBA sponsors set activation plans as new season gets underway   [10:40PM  American City Business Journals]
▶ [$$] AmEx Chief's Mission: Get Millennials, Keep the Rich   [05:30AM  The Wall Street Journal]
▶ [$$] Chenaults Unfinished Business at AmEx   [12:37AM  The Wall Street Journal]
▶ [$$] American Express: risk and rewards   [01:42PM  Financial Times]
▶ American Express: Same As It Ever Was   [12:10PM  Barrons.com]
▶ Who is the New CEO of American Express?   [06:52AM  TheStreet.com]
▶ PRESS DIGEST- Financial Times - Oct 19   [Oct-18-17 07:58PM  Reuters]
▶ [$$] American Express CEO to Step Down After 16 Years   [07:37PM  The Wall Street Journal]
▶ United Airlines, AmEx, United Rentals Beat Views; Alcoa Misses   [06:27PM  Investor's Business Daily]
▶ Business Highlights   [05:43PM  Associated Press]
▶ AmEx CEO stepping down, successor named   [05:40PM  American City Business Journals]
▶ AmEx's CEO Chenault to Leave Home   [05:05PM  Barrons.com]
▶ American Express tops Street 3Q forecasts   [04:34PM  Associated Press]
▶ American Express Leaves Us Without a Clue   [01:28PM  TheStreet.com]
▶ American Express: A Swipe at 3Q Earnings   [12:58PM  Barrons.com]
▶ Does American Express Have a Millennial Problem?   [Oct-17-17 06:35PM  Motley Fool]
▶ [$$] Supreme Court to Hear AmEx Antitrust Case   [12:28AM  The Wall Street Journal]
▶ American Express Fees Under Renewed Threat As Top Court To Hear Case   [Oct-16-17 04:08PM  Investor's Business Daily]
▶ [$$] Supreme Court to Hear AmEx Antitrust Case   [03:51PM  The Wall Street Journal]
▶ Dow Leads Stocks As Indexes Crawl To Record Highs Again   [03:07PM  Investor's Business Daily]
▶ PayPal Market Cap Surpasses Amex's   [10:56AM  Investopedia]
▶ [$$] PayPal's Market Value Eclipses AmEx, Nears Morgan Stanley, Goldman   [Oct-14-17 09:55AM  The Wall Street Journal]
▶ Intel, Procter & Gamble Push DJIA Higher Friday   [Oct-13-17 04:01PM  24/7 Wall St.]
▶ Using Peter Lynch to Improve Your Investing   [Oct-10-17 12:56PM  GuruFocus.com]
▶ Visa Inc (V) Stock Produces Strong Growth, But at a Premium   [Oct-09-17 12:05PM  InvestorPlace]
Financial statements of AXP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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