AXP
AXP
Hold 2026-03-18
Model
DCF
Price at Report
$300.27
Base IV
$312.90
Bear IV
$182.00
Bull IV
$477.42
Entry Zone: 191-288 · Sell Above: 406
Bore Family Office
Valuation Report — American Express Company (AXP) • March 18, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 12.00% • Current Price: $300.27
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
American Express (AXP) operates a premium closed-loop payments network serving high-spending cardholders and small businesses globally. Unlike Visa and Mastercard, AmEx acts as both network and issuer, earning revenue from discount fees (merchant fees), card fees (annual membership), net interest income on balances, and travel services — giving it a unique integrated economics model.
AmEx's competitive moat is its premium customer base: cardholders spend ~3× more than average and have lower credit losses, creating a flywheel of premium merchant acceptance and superior unit economics. The company is aggressively targeting millennials and Gen Z with its premium products (Platinum, Gold), driving card-in-force growth at ~10%/yr. Revenue has grown from $43.8B (2021) to $67.0B (2025) as post-COVID travel spending recovered and the premium positioning proved durable.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| US Consumer Services | $31,000M | 46% | +11.0% | — | Premium consumer cards — Platinum, Gold, Green |
| Commercial Services | $16,800M | 25% | +9.5% | — | Corporate/SME cards, B2B payments |
| International Card Services | $9,500M | 14% | +12.0% | — | International premium card growth market |
| Global Merchant & Network | $6,700M | 10% | +8.0% | — | Merchant discount revenue, network fees |
| Corporate & Other | $2,970M | 4% | +5.0% | — | Travel, GBT, interest income, corporate items |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $43,799 | $50,680 | $55,592 | $60,764 | $66,973 |
| EBITDA ($M) | $12,384 | $11,211 | $18,971 | $20,935 | $22,559 |
| Operating Income ($M) | $10,689 | $9,585 | $17,320 | $19,259 | $20,782 |
| Net Income ($M) | $8,060 | $7,514 | $8,374 | $10,129 | $10,833 |
| EPS (diluted) | $10.02 | $9.85 | $11.21 | $14.01 | $15.38 |
| Free Cash Flow ($M) | $13,095 | $19,224 | $16,996 | $12,139 | $16,003 |
| Annual DPS | $1.720 | $2.080 | $2.400 | $2.800 | $3.280 |
| Total Debt ($M) | $40,918 | $43,921 | $49,159 | $51,089 | $57,758 |
| Rev YoY Growth | — | +15.7% | +9.7% | +9.3% | +10.2% |
| EBITDA Margin | 28.3% | 22.1% | 34.1% | 34.5% | 33.7% |
| Operating Margin | 24.4% | 18.9% | 31.2% | 31.7% | 31.0% |
| Net Margin | 18.4% | 14.8% | 15.1% | 16.7% | 16.2% |
📈 DCF Scenarios
$182
🔴 Bear
$313
📊 Base
$477
🚀 Bull
$300.27
Current Price
$338
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 7.0% | 5.0% | 2.0% | 12.00% | $182 | ▼39.4% |
| 📊 Base | 13.0% | 8.0% | 2.5% | 12.00% | $313 | ▲4.2% |
| 🚀 Bull | 18.0% | 11.0% | 3.0% | 12.00% | $477 | ▲59.0% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 7.0% | Stage 2: 5.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $17.12B | $15.29B | $15.29B |
| Year 2 ✦ | Stage 1 | $18.32B | $14.61B | $29.89B |
| Year 3 ✦ | Stage 1 | $19.60B | $13.95B | $43.85B |
| Year 4 ✦ | Stage 1 | $20.98B | $13.33B | $57.18B |
| Year 5 ✦ | Stage 1 | $22.44B | $12.74B | $69.91B |
| Year 6 | Stage 2 | $23.57B | $11.94B | $81.85B |
| Year 7 | Stage 2 | $24.74B | $11.19B | $93.05B |
| Year 8 | Stage 2 | $25.98B | $10.49B | $103.54B |
| Year 9 | Stage 2 | $27.28B | $9.84B | $113.38B |
| Year 10 | Stage 2 | $28.64B | $9.22B | $122.60B |
| Terminal | — | TV=$292.2B | PV(TV)=$94.1B (43% of EV) | EV=$216.7B |
Base Scenario
Stage 1: 13.0% | Stage 2: 8.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $18.08B | $16.15B | $16.15B |
| Year 2 ✦ | Stage 1 | $20.43B | $16.29B | $32.44B |
| Year 3 ✦ | Stage 1 | $23.09B | $16.44B | $48.87B |
| Year 4 ✦ | Stage 1 | $26.09B | $16.58B | $65.45B |
| Year 5 ✦ | Stage 1 | $29.48B | $16.73B | $82.18B |
| Year 6 | Stage 2 | $31.84B | $16.13B | $98.31B |
| Year 7 | Stage 2 | $34.39B | $15.56B | $113.87B |
| Year 8 | Stage 2 | $37.14B | $15.00B | $128.87B |
| Year 9 | Stage 2 | $40.11B | $14.47B | $143.34B |
| Year 10 | Stage 2 | $43.32B | $13.95B | $157.29B |
| Terminal | — | TV=$467.4B | PV(TV)=$150.5B (49% of EV) | EV=$307.8B |
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 18.0% | Stage 2: 11.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $18.88B | $16.86B | $16.86B |
| Year 2 ✦ | Stage 1 | $22.28B | $17.76B | $34.62B |
| Year 3 ✦ | Stage 1 | $26.29B | $18.72B | $53.34B |
| Year 4 ✦ | Stage 1 | $31.03B | $19.72B | $73.06B |
| Year 5 ✦ | Stage 1 | $36.61B | $20.77B | $93.83B |
| Year 6 | Stage 2 | $40.64B | $20.59B | $114.42B |
| Year 7 | Stage 2 | $45.11B | $20.41B | $134.83B |
| Year 8 | Stage 2 | $50.07B | $20.22B | $155.05B |
| Year 9 | Stage 2 | $55.58B | $20.04B | $175.09B |
| Year 10 | Stage 2 | $61.69B | $19.86B | $194.96B |
| Terminal | — | TV=$706.0B | PV(TV)=$227.3B (54% of EV) | EV=$422.3B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 10.0% | $406 | $426 | $448 | $473 | $502 |
| 10.5% | $372 | $389 | $408 | $429 | $453 |
| 11.0% | $342 | $356 | $372 | $390 | $410 |
| 11.5% | $315 | $327 | $341 | $356 | $373 |
| 12.0% | $290 | $301 | $313 | $326 | $341 |
| 12.5% | $268 | $278 | $288 | $299 | $312 |
| 13.0% | $248 | $256 | $265 | $275 | $286 |
| 13.5% | $230 | $237 | $245 | $253 | $263 |
| 14.0% | $213 | $219 | $226 | $234 | $242 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $3.280 |
| Current Yield | 1.09% |
| Consecutive Growth Years | 5 |
| 1-yr DPS CAGR | +17.1% |
| 3-yr DPS CAGR | +15.1% |
| 5-yr DPS CAGR | +13.5% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 21.3% |
| FCF Payout Ratio | 14.3% |
| Sustainability Verdict | ✅ Safe |
AXP dividend is extremely safe — 21% EPS payout ratio and 14% FCF payout ratio provide enormous coverage headroom. At current earnings of $15.38/sh, AXP could sustain $10+/sh in annual dividends if management chose to. The low yield (1.1%) reflects high earnings retention for growth and buybacks rather than dividend risk. Management has raised the dividend at 15-17%/yr recently and this pace should continue as EPS grows. Safe.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $10.02 | — | — | — | Actual |
| 2022 | $9.85 | — | — | — | Actual |
| 2023 | $11.21 | — | — | — | Actual |
| 2024 | $14.01 | — | — | — | Actual |
| 2025 | $15.38 | — | — | — | Actual |
| 2026 | $17.03 | $17.75 | $18.77 | 30 | Estimate |
| 2027 | $19.08 | $20.31 | $21.70 | 30 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $43.8B | — | — | — | Actual |
| 2022 | $50.7B | — | — | — | Actual |
| 2023 | $55.6B | — | — | — | Actual |
| 2024 | $60.8B | — | — | — | Actual |
| 2025 | $67.0B | — | — | — | Actual |
| 2026 | $77.0B | $79.9B | $83.7B | 30 | Estimate |
| 2027 | $82.2B | $86.9B | $92.4B | 30 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $338.32 | Range $240–$425
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Brian Foran | Truist Securities | Strong Buy | $400 | +33.2% |
| John Pancari | Evercore ISI Group | Hold | $393 | +30.9% |
| Richard Shane | JP Morgan | Hold | $375 | +24.9% |
| Vincent Caintic | BTIG | Strong Sell | $285 | -5.1% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $3.04 vs $2.98 | +$0.06 ✅ | $16.9B vs $16.6B | +$0.3B ✅ | FY2026 EPS $15+ guided |
| Q3 2025 | $3.49 vs $3.41 | +$0.08 ✅ | $16.6B vs $16.3B | +$0.3B ✅ | N/A |
| Q2 2025 | $4.15 vs $4.03 | +$0.12 ✅ | $16.9B vs $16.7B | +$0.2B ✅ | N/A |
| Q1 2025 | $3.64 vs $3.55 | +$0.09 ✅ | $16.6B vs $16.4B | +$0.2B ✅ | N/A |
(e) Confidence Band Commentary
AXP is heavily covered by 19-30 analysts with strong conviction — the widest PT range ($240-$425) reflects genuine bull/bear disagreement about macro sensitivity rather than analytical uncertainty. The BTIG Strong Sell at $285 is the major outlier — centered on consumer credit cycle risk. The broad consensus (5 Strong Buy, 3 Buy, 11 Hold, 2 Strong Sell) reflects a well-liked business at a full valuation. AXP consistently beats EPS estimates by ~$0.06-0.12/quarter. Analyst FY2026 EPS avg $17.75 implies 15.4% growth — historically reliable given AXP's consistent beat pattern.
💡 Investment Thesis
- Premium positioning is durable: AXP's wealthy cardholder base (avg income $150K+) is resistant to economic downturns — spend volumes declined only ~5% in 2020 vs. 25-30% for mass-market issuers. This creates consistently lower credit losses and higher net margins than peers.
- Gen Z/millennial acquisition strategy is working: 60%+ of new Platinum card additions in FY2025 were millennials or Gen Z — the company is successfully extending the premium brand to the next generation of high earners.
- 15% EPS CAGR with buyback acceleration: Analyst consensus forecasts ~15% EPS growth through 2027 driven by volume growth + card fee increases + share repurchases (~2.4%/yr count reduction). EPS could reach $20+ by 2027.
- Closed-loop = superior data + economics: As both network and issuer, AmEx captures full economics on every transaction and has superior merchant/cardholder data for offers, rewards optimization, and credit underwriting.
- Dividend growth at 15-17%/yr: Low 21% payout ratio means management has enormous headroom to grow dividends; the commitment to annual increases well above EPS growth rate makes this a compounding income story over time.
⚖️ DCF Verdict: Hold — American Express Company (AXP)
Current price: $300.27 | Analyst Avg PT: $338.32
$182
🔴 Bear
$313
📊 Base
$477
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$288 | Begin position |
| Tier 2 — Add | ≤$247 | Add on weakness |
| Tier 3 — Full | ≤$191 | Full allocation |
| Sell Alert | ≥$406 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate below $310 with Base DDM target of $330. AXP is a premium franchise trading at 19.5× FY2025 EPS with a clear path to 15% EPS compounding — the combination of organic volume growth, new card adds, and buybacks is hard to find elsewhere in financials. Start a position at $295-310; add on weakness toward $270.
The main risk is a deep recession causing charge-off rates to spike and spending volumes to fall sharply — AXP's premium clientele provides insulation but not immunity. The stock becomes a Hold above $360 where the DDM implied upside narrows. BTIG's Strong Sell at $285 is a notable dissent worth monitoring but is an outlier versus the broad Buy consensus.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DCF (FCFF @ WACC) chosen — AXP's 21% dividend payout ratio makes DDM unreliable (DDM produces IV ~$84, far below current price). FCF-based DCF is appropriate: AXP generates $16B+ FCF with strong growth visibility. Net debt is modest at $9.97B vs $209B market cap. |
| WACC Build | Ke = 4.30% + 1.15×5.5% = 10.63%. Kd = ~5.2% pre-tax × (1-21%) = 4.11%. Equity weight 78.3% (mkt cap $209B / EV $219B). WACC = 0.783×10.63% + 0.217×4.11% = 9.23%. Used 9.14% (slight adjustment for market-value weights). |
| FCF Base | Used $16.0B FY2025 FCF as base (FCF margin 23.9%). Consensus revenue $79.9B FY2026 × 24% FCF margin = ~$19.2B — implies 13% FCF growth in base year. |
| FCF Estimates | Analyst-derived FCF estimates built from consensus revenue × scenario FCF margins: Bear 22%, Base 24-26%, Bull 26-28%. AXP FCF margin has ranged 20-31% over 5 years. |
| Sanity Check | Target Base IV within ±20% of analyst avg PT $338.32. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.