Today we’re going to take a look at the well-established American Express Company (NYSE:AXP). The company’s stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $102.7 at one point, and dropping to the lows of $90.45. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether American Express’s current trading price of $96.96 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at American Express’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for American Express
Is American Express still cheap?The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.75% below my intrinsic value, which means if you buy American Express today, you’d be paying a fair price for it. And if you believe that the stock is really worth $102.87, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because American Express’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will American Express generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to more than double over the next couple of years, the future seems bright for American Express. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? AXP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AXP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on American Express. You can find everything you need to know about American Express in the latest infographic research report. If you are no longer interested in American Express, you can use our free platform to see my list of over 50 other stocks with a high growth potential.