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AMERICAN EXPRESS
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AXP is trading at $41.00 a share. Not since July 14th of 2003 has this stock traded so low. In 2003 American Express, the largest of all credit card companies in the world, had gross revenue of $18,235,000. Year ending 2007, $29,900,000. 1/3 or a 33% gain in gross income over 5 years. 1 year EPS gowth of +16.24% P/E (TTM) 12.6x, P/E (forward 12 months) 12.2x. EPS growth rate far exceeds the financial sector. Yet with great numbers, barely a red mark on the balence sheets, this stock continues to fall in price. Even if the US economy falls deep into recession it is doubtful that the Amierican Express's financials would fall to 2003 levels. American Express does not have the reputation of getting involved in the subprime credit expoeure but. like many credit card companies does offer a Gold card with a yearly fee to lower credit rated consumers. They also have the reputatrion of heavy debt collection activitys when they encounter customers that fall behind. As the card needs paid in full each month AXP stays on top of thier collections. Yet the price continues to drop. They don't back mortgages. They charge the highest business percentage of any card just to give a bussiness's custumers the convienence of using the card for thier purchases. Thier involved in business loans and lines of credit but still not in subprime applicants. The companies fudamentals are quite sound with a 12.8% net profit margin.They have completed the sale of the American Express Bank Ltd. to Standard Chartered PLC. this past Feb. Which should supply the company with a large cash stash. The American Express Travlers check is known, sold and excepted wordwide. The American Express Travel services are used worldwide by large and small business's. Yet the stock continues to fall. After the Bears, Strearns Bailout by the Federal Reserve the stock fell another $1.69. This month it has fell $5.00. Of all the financials this stock should enjoy a quick recovery. Maybe not the most but at least the most for sure. Ric B. | ||
