American Express oversold and looking to bounce
Credit card issuer and processor American Express (NYSE: AXP) has performed very well in recent years in terms of its fundamental statistics. The company has seen earnings grow by an average of 18% per year over the last three years and it saw 13% growth in its EPS in the second quarter. Sales have grown by 11% per year in the last three years and they were up 9% in the second quarter.
The company boasts a return on equity of 31.7%, a profit margin of 18.8%, and an operating margin of 21.3%.
Looking at some valuation indicators from the Tickeron fundamental analysis overview, we see a price to book ratio of 4.35 and a P/E ratio of 14.96. The price to book ratio is slightly above the P/B ratio of the S&P 500 while the P/E ratio is below the current P/E of the S&P.
The stock has fallen over the last few weeks and it dropped below its 50-day moving average for the first time since January as a result. You can see that a trend channel has formed on the stock that goes back to the low in December. This particular channel is formed more by the upper rail connecting the highs from each month and the parallel lower rail connects the December low with the low from August 5.
The 10-day RSI hit oversold territory this week and the daily stochastic readings also reached oversold territory. The stochastic readings made a bullish crossover on August 6 and past crossovers have been good bullish signs for the stock.
In addition to the oversold levels on the RSI and stochastic readings, we see the following from Tickeron’s technical analysis overview.
The lower Bollinger Band was broken -- a price increase is expected as the stock heads toward the middle band, which indicates a buy or call consideration for traders. In 26 of 42 cases where AXP's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued Uptrend are 62%.
The sentiment toward American Express was a little surprising, specifically the analysts’ ratings weren’t as bullish as I would have expected given the solid fundamentals for the company. There are 31 analysts following the stock currently and there are 14 “buy” ratings, 16 “hold” ratings, and one “sell” rating. The overall buy percentage is only 45.2% and that is well below average.
The short interest ratio is a little lower than average at this time with a current reading of 1.8. The average short interest ratio is in the 3.0 range so the bullish sentiment is a little greater in this category.
Something to remember about the sentiment indicators is that they are best used as contrarian indicators. Extreme bullish sentiment isn’t something you want on a stock as it means the expectations are really high. Conversely, extreme bearish sentiment can help a stock if the company is producing good earnings results. The sentiment toward American Express isn’t extremely bearish, but the analysts’ ratings are definitely skewed toward the bearish side.
Given the solid fundamentals, the oversold levels on the chart, and the bearishly skewed sentiment, look for American Express to bounce in the coming weeks.
AXP in +1.42% Uptrend, advancing for three consecutive days on November 26, 2024
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where AXP advanced for three days, in of 346 cases, the price rose further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Aroon Indicator entered an Uptrend today. In of 255 cases where AXP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for AXP moved out of overbought territory on December 02, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 39 similar instances where the indicator moved out of overbought territory. In of the 39 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 73 cases where AXP's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on December 09, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on AXP as a result. In of 87 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for AXP turned negative on December 05, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 50 similar instances when the indicator turned negative. In of the 50 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AXP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
AXP broke above its upper Bollinger Band on November 22, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. AXP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 71, placing this stock better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.841) is normal, around the industry mean (4.868). P/E Ratio (20.304) is within average values for comparable stocks, (55.482). Projected Growth (PEG Ratio) (1.572) is also within normal values, averaging (3.039). Dividend Yield (0.010) settles around the average of (0.040) among similar stocks. P/S Ratio (2.775) is also within normal values, averaging (3.429).
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a financial conglomerate
Industry FinanceRentalLeasing