American Express (AXP) Could Be 20% Undervalued Following Its Preferred Dividend Declaration

American Express (AXP) recently declared a quarterly dividend on its 3.550% Fixed Rate Reset Noncumulative Preferred Shares, Series D, an event that draws attention to how preferred dividends fit into the company’s broader capital structure.

See our latest analysis for American Express.

At a share price of US$350.79, American Express has seen short term share price momentum soften recently, with a 1 month share price return of 3.78% and a year to date share price return that is down 5.89%, while longer term total shareholder returns of 16.57% over 1 year and more than doubling over 3 and 5 years point to a stronger underlying track record as the company rolls out new B2B payment tools, customer partnerships and prepares to report upcoming earnings.

If this kind of payment and financials story interests you, it can be useful to see what else is moving in related areas, starting with 18 top founder-led companies

Bulls point to American Express’s preferred payouts, premium partnerships and B2B push, while bears focus on the recent share price pullback and sector uncertainty. How does today’s valuation stack up against those competing stories?

Most Popular Narrative: 20.4% Undervalued

On the latest numbers, the most followed narrative puts American Express fair value at $440.45, comfortably above the last close of $350.79 and framing the stock as underpriced in that view.

Strategic investments in technology, including AI-driven analytics for risk, marketing, and customer experience, are anticipated to drive continued gains in customer retention, acquisition, and operational efficiency, contributing to enhanced net margins and higher earnings over time.

Read the complete narrative.

Want the full story behind that fair value gap? The narrative hinges on a tight mix of revenue growth, margin tweaks and a richer earnings mix that could surprise many readers.

Result: Fair Value of $440.45 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upbeat American Express story could be challenged if digital wallets and alternative payment platforms erode card usage, or if regulators tighten rules on fees and lending.

Find out about the key risks to this American Express narrative.

Another View on American Express Valuation

While the narrative fair value of $440.45 frames American Express as 20.4% undervalued, the current P/E of 21.6x sends a different signal. It is higher than the US Consumer Finance industry at 8.7x, above the peer average of 20.6x, and above the fair ratio of 19.8x, which points to valuation risk if sentiment cools.

For readers, the tension between a discounted cash flow view that suggests opportunity and a richer earnings multiple that implies less margin for error comes down to a practical question: which yardstick do you trust more when growth expectations are not especially high?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With mixed signals on American Express valuation and sentiment, this is a good time to review the data yourself and decide how you feel about its balance of risk and reward, including the 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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