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published in Blogs
Aug 12, 2019

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.

Related Ticker: AXP

AXP in upward trend: price may ascend as a result of having broken its lower Bollinger Band on April 10, 2024

AXP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 37 cases where AXP's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 4 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AXP advanced for three days, in of 329 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 225 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 March 22, 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 36 similar instances where the indicator moved out of overbought territory. In of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Momentum Indicator moved below the 0 level on April 04, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on AXP as a result. In of 91 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

AXP moved below its 50-day moving average on April 16, 2024 date and that indicates a change from an upward trend to a downward trend.

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 .

Fundamental Analysis (Ratings)

Fear & Greed

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 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 76, 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 Price Growth Rating for this company is (best 1 - 100 worst), indicating steady 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 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 (4.672). P/E Ratio (20.304) is within average values for comparable stocks, (53.143). Projected Growth (PEG Ratio) (1.572) is also within normal values, averaging (3.039). Dividend Yield (0.010) settles around the average of (0.042) among similar stocks. P/S Ratio (2.775) is also within normal values, averaging (4.549).

Notable companies

The most notable companies in this group are VISA (NYSE:V), Mastercard (NYSE:MA), American Express Company (NYSE:AXP), PayPal Holdings (NASDAQ:PYPL), Capital One Financial (NYSE:COF), United Rentals (NYSE:URI), Discover Financial Services (NYSE:DFS), Synchrony Financial (NYSE:SYF), SLM Corp (NASDAQ:SLM), Bread Financial Holdings (NYSE:BFH).

Industry description

A leasing company (e.g. United Rentals, Inc. ) is typically the legal owner of the asset for the duration of the lease, while the lessee has operating control over the asset while also having some share of the economic risks and returns from the change in the valuation of the underlying asset. Per capita disposable income and corporate earnings or cash flow could be some of the critical metrics for this business – the higher the values of these metrics, the potentially greater ability of consumers/businesses to afford apartments/office spaces for rent. Other finance companies include credit/debit card payment processing companies (e.g. Visa Inc. and Mastercard), private label credit cards providers (e.g. Synchrony Financial) and automobile finance companies (e.g. Credit Acceptance Corporation).

Market Cap

The average market capitalization across the Finance/Rental/Leasing Industry is 11.26B. The market cap for tickers in the group ranges from 2.17K to 573.25B. V holds the highest valuation in this group at 573.25B. The lowest valued company is AZNVF at 2.17K.

High and low price notable news

The average weekly price growth across all stocks in the Finance/Rental/Leasing Industry was -3%. For the same Industry, the average monthly price growth was 12%, and the average quarterly price growth was 119%. DWAY experienced the highest price growth at 84%, while RAHGF experienced the biggest fall at -30%.

Volume

The average weekly volume growth across all stocks in the Finance/Rental/Leasing Industry was -11%. For the same stocks of the Industry, the average monthly volume growth was -51% and the average quarterly volume growth was -5%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 52
P/E Growth Rating: 53
Price Growth Rating: 83
SMR Rating: 62
Profit Risk Rating: 75
Seasonality Score: 9 (-100 ... +100)
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A.I.Advisor
published price charts
A.I. Advisor
published General Information

General Information

a financial conglomerate

Industry FinanceRentalLeasing

Profile
Fundamentals
Details
Industry
Financial Conglomerates
Address
200 Vesey Street
Phone
+1 212 640-2000
Employees
74600
Web
https://www.americanexpress.com
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