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A sign showing the American Express logo is seen outside of a restaurant
Justin Sullivan/Getty Images
With the year almost over, we’re taking a look at all 30 stocks in the Dow Jones Industrial Average, starting with the worst performers—
Boeing
and
Walgreens Boots Alliance
—and working our way up to the highest-flying stock in the benchmark—Apple. The ranking may shift before the close of 2020 trading, but the stories behind the stocks shouldn’t.
American Express
(AXP), which caters to affluent individuals and small businesses, is probably looking forward to closing the books on 2020.
Shares are down 5.1% for the year, marked by a sudden and steep drop in airline travel, hotel stays, and restaurant entertaining. Businesses are letting people work from home, leisure travel is at a low point, and small businesses are struggling to survive public health shutdown mandates. The Dow Jones Industrial Average has gained 6.3% while the S&P 500 index is up 15.4% this year.
American Express gets 60% of its revenue from merchant discount fees, 20% from interest on loans, and 20% from card fees, says MoffettNathanson analyst Lisa Elllis, who initiated the stock at a Buy earlier this month, with a price target of $155.
The company has a $95 billion market cap. The year opened well for American Express, surging to a high of $138.13 before stumbling 51% to a low of $67 on March 18. It’s the same pattern as other stocks—since mid-March, the shares have steadily regained ground.
But the pandemic did some damage to the bottom line. First quarter earnings per share of 41 cents came in well below the expected $1.46, with second-quarter earnings per share even lower, at 29 cents, according to FactSet. Profit for the full year is expected to be $3.31 a share versus $7.99 last year.
Full-year revenue for 2020 is estimated to come in at $36.2 billion versus $43.5 billion in 2019.
Vaccines and a return to more normal activities may make American Express stock a good deal for those looking to get in on the reopening trend. It trades at a forward multiple of 17 compared to
Mastercard’s
40 and
Visa’s
38, according to FactSet.
Write to Liz Moyer at [email protected]
