January 15, 2017 NYSE: AXP

AMERICAN EXPRESS CO BUY A+

A

A-

HOLD

B+

B

Annual Dividend Rate $1.28

B-

C+

C

Annual Dividend Yield 1.66%

SELL C-

D+

D

Beta 1.20

Sector: Financial Services AXP BUSINESS DESCRIPTION American Express Company, together with its subsidiaries, provides charge and credit payment card products and travel-related services to consumers and businesses worldwide. It operates through four segments: U.S.

D-

E+

E

E-

F

Market Capitalization $70.4 Billion Sub-Industry: Consumer Finance

Weekly Price: (US$)

SMA (50)

BUY 52-Week Range $50.27-$78.00

RATING SINCE TARGET PRICE

11/16/2016 $88.80

Price as of 1/12/2017 $76.88

Source: S&P

SMA (100)

1 Year

2 Years 95 90

TARGET TARGET TARGETPRICE PRICE$88.80 $88.80 PRICE $88.80 TARGET

85 80 75

STOCK PERFORMANCE (%) 3 Mo. Price Change 26.67

1 Yr. 19.37

70

3 Yr (Ann) -4.60

65 60

GROWTH (%) Last Qtr -4.52 -9.80 -3.23

12 Mo. -0.70 -4.01 1.98

3 Yr CAGR -0.42 5.35 10.06

RETURN ON EQUITY (%) AXP Q3 2016 25.69 Q3 2015 26.57 Q3 2014 28.42

Ind Avg 18.38 19.48 20.35

S&P 500 12.00 12.28 14.59

Revenues Net Income EPS

55 50 Rating History

BUY

HOLD

BUY

Volume in Millions

100 50

2015

0 2017

2016

COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

P/E COMPARISON RECOMMENDATION We rate AMERICAN EXPRESS CO (AXP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

13.63

13.28

25.49

AXP

Ind Avg

S&P 500

EPS ANALYSIS¹ ($)

HIGHLIGHTS AMERICAN EXPRESS CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AMERICAN EXPRESS CO reported lower earnings of $5.03 versus $5.55 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $5.03).

2014

2015

Q3 1.20

Q2 2.10

Q1 1.45

Q4 0.89

Q3 1.24

Q2 1.42

Q1 1.48

Q4 1.39

Q3 1.40

Q2 1.43

Q1 1.33

AXP, with its decline in revenue, slightly underperformed the industry average of 1.1%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share. Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

2016

NA = not available NM = not meaningful 1 Compustat fiscal year convention is used for all fundamental data items.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Consumer Finance industry and the overall market, AMERICAN EXPRESS CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.

Report Date: January 15, 2017

PAGE 1

January 15, 2017 NYSE: AXP

AMERICAN EXPRESS CO Sector: Financial Services Consumer Finance Source: S&P Annual Dividend Rate $1.28

Annual Dividend Yield 1.66%

PEER GROUP ANALYSIS

Market Capitalization $70.4 Billion

52-Week Range $50.27-$78.00

Price as of 1/12/2017 $76.88

INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN* 100%

Beta 1.20

Consumer Finance is a dominated by three immense credit card companies American Express (AXP), Capital One Financial (COF) and Discover Financial Services (DFS). Credit card companies make money by charging small fees on billions of consumer transactions. New legislation to strengthen financial industry regulation has been put in place to protect consumers from the worst practices of the credit card banks. This is not expected to significantly hamper profitability.

OMF FA RA VO BL E

The smaller end of the industry is comprised of companies like EZCORP (EZPW) and Cash America (CSH) which offer pawn lending, auto title loans, pay day loan cash advances, and check cashing services. Providing credit services to individuals, without formal bank accounts, to meet their short-term cash needs is a risky but high margin business. Non-recourse pawn loans are collateralized by tangible personal property like jewelry, electronics, tools, or other valuable goods.

SLM CACC

UN

SYF AXP FA

DFS

LE

-20%

B RA VO

Revenue Growth (TTM)

LC

SC

ALLY

25%

70%

Additional reforms designed to protect the banking industry from institutions from taking on excess leverage are being put in place to reduce systemic risk, regulate derivative financial products, and liquidate financial institutions formerly believed to be too-big-to-fail without a tax-payer bailout. This reform may include new consumer oriented regulation of these smaller lenders. The recovering economy and the new financial reforms serve to add confidence to consumer finance group.

EBITDA Margin (TTM) Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $2.2 Billion and $70.4 Billion. Companies with NA or NM values do not appear. *EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization.

100%

REVENUE GROWTH AND EARNINGS YIELD

OMF

PEER GROUP: Consumer Finance

FA RA VO BL E

Ticker AXP ALLY NAVI SLM SC COF CACC OMF SYF DFS LC

Recent Company Name Price ($) AMERICAN EXPRESS CO 76.88 ALLY FINANCIAL INC 20.15 NAVIENT CORP 16.55 SLM CORP 11.18 SANTANDER CONSUMER USA HL 13.70 CAPITAL ONE FINANCIAL CORP 87.89 CREDIT ACCEPTANCE CORP 210.41 ONEMAIN HOLDINGS INC 23.57 SYNCHRONY FINANCIAL 36.13 DISCOVER FINANCIAL SVCS INC 71.31 LENDINGCLUB CORP 5.60

Market Cap ($M) 70,365 9,503 5,267 5,186 4,909 45,893 4,277 3,176 29,824 28,722 2,208

Price/ Earnings 13.63 NM 6.81 19.28 6.34 12.52 13.28 NM 13.58 12.92 NM

Net Sales TTM ($M) 34,179.00 9,845.00 4,814.00 999.62 6,368.82 26,984.00 930.80 3,604.00 14,686.00 10,307.00 1,193.31

Net Income TTM ($M) 5,482.00 1,082.00 821.00 269.93 776.84 3,880.00 325.20 -31.00 2,222.00 2,330.00 -109.13

The peer group comparison is based on Major Consumer Finance companies of comparable size.

UN B RA VO

ALLY LE

-20%

FA

Revenue Growth (TTM)

LC

-5%

SLM CACC SYF COF AXP DFS

NAVI SC

17.5%

Earnings Yield (TTM) Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -5.9% and 95.3%. Companies with NA or NM values do not appear.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.

Report Date: January 15, 2017

PAGE 2

January 15, 2017 NYSE: AXP

AMERICAN EXPRESS CO Sector: Financial Services Consumer Finance Source: S&P Annual Dividend Rate $1.28

Annual Dividend Yield 1.66%

COMPANY DESCRIPTION American Express Company, together with its subsidiaries, provides charge and credit payment card products and travel-related services to consumers and businesses worldwide. It operates through four segments: U.S. Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services. The company's products and services include charge and credit card products; network services; expense management products and services; travel-related services; and stored value/prepaid products. Its products and services also comprise merchant acquisition and processing, servicing and settlement, merchant financing, point-of-sale, and marketing and information products and services for merchants; fraud prevention services; and the design of customized customer loyalty and rewards programs. The company sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through direct mail, online applications, in-house and third-party sales forces, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York. AMERICAN EXPRESS CO 200 Vesey Street New York, NY 10285 USA Phone: 212-640-2000 Fax: 212-640-0404 http://www.americanexpress.com Employees: 55000

Beta 1.20

Market Capitalization $70.4 Billion

52-Week Range $50.27-$78.00

Price as of 1/12/2017 $76.88

STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of AXP shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock’s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR

SCORE

3.5

Growth out of 5 stars weak Measures the growth of both the company's income statement and cash flow. On this factor, AXP has a growth score better than 60% of the stocks we rate.

strong

2.5

Total Return out of 5 stars weak Measures the historical price movement of the stock. The stock performance of this company has beaten 40% of the companies we cover.

strong

4.0

Efficiency out of 5 stars weak Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 70% of the companies we review.

strong

3.0

Price volatility out of 5 stars weak Measures the volatility of the company's stock price historically. The stock is less volatile than 50% of the stocks we monitor.

strong

5.0

Solvency out of 5 stars weak Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze.

strong

3.5

Income out of 5 stars weak Measures dividend yield and payouts to shareholders. The company's dividend is higher than 60% of the companies we track.

strong

THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.

Report Date: January 15, 2017

PAGE 3

January 15, 2017 NYSE: AXP

AMERICAN EXPRESS CO Sector: Financial Services Consumer Finance Source: S&P Annual Dividend Rate $1.28

Annual Dividend Yield 1.66%

Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial

Beta 1.20

Market Capitalization $70.4 Billion

52-Week Range $50.27-$78.00

Price as of 1/12/2017 $76.88

FINANCIAL ANALYSIS AMERICAN EXPRESS CO's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 1.49% from the same quarter last year.

0.97

5.75 E

5.61 E

Q4 FY16

2016(E)

2017(E)

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.TheStreetRatings.com.

INCOME STATEMENT Net Sales ($mil) EBITDA ($mil) EBIT ($mil) Net Income ($mil)

Q3 FY16 8,204.00 2,265.00 1,991.00 1,142.00

Q3 FY15 8,592.00 2,316.00 2,050.00 1,266.00

Q3 FY16 26,520.00 153,377.00 47,755.00 21,017.00

Q3 FY15 19,938.00 154,216.00 51,813.00 21,335.00

Q3 FY16 27.61% 27.60% 24.27% 0.22 3.57% 25.69%

Q3 FY15 26.96% 26.95% 23.86% 0.22 3.70% 26.57%

Q3 FY16 NA 0.69 212.00 9.39

Q3 FY15 NA 0.71 176.00 11.65

Q3 FY16 917 0.00 1.20 22.92 NA 4,754,621

Q3 FY15 985 0.00 1.24 21.66 NA 4,035,047

BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) Total Debt ($mil) Equity ($mil) PROFITABILITY Gross Profit Margin EBITDA Margin Operating Margin Sales Turnover Return on Assets Return on Equity DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % Avg Daily Volume

2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.

Report Date: January 15, 2017

PAGE 4

January 15, 2017 NYSE: AXP

AMERICAN EXPRESS CO Sector: Financial Services Consumer Finance Source: S&P Annual Dividend Rate $1.28

Annual Dividend Yield 1.66%

RATINGS HISTORY Our rating for AMERICAN EXPRESS CO was recently upgraded from Hold to Buy on 11/16/2016. As of 1/12/2017, the stock was trading at a price of $76.88 which is 1.4% below its 52-week high of $78.00 and 52.9% above its 52-week low of $50.27.

BUY: $71.68

HOLD: $54.70

BUY: $89.50

2 Year Chart

Market Capitalization $70.4 Billion

Price/Earnings

1

2

3

premium

$80 $70

52-Week Range $50.27-$78.00

4

5

AXP 13.63 Peers 13.28 • Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation. • AXP is trading at a valuation on par with its peers. Price/Projected Earnings

1

2

3

premium

From Hold Buy Buy

To Buy Hold Buy

4

5

AXP 13.70 Peers 12.70 • Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations. • AXP is trading at a valuation on par with its peers. Price/Book

(as of 1/12/2017)

41.72% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 30.45% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 27.83% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns.

1

2

3

premium

4

5

Price/Sales

1

2

premium

3

4

5

Price to Earnings/Growth

4

5

discount

1

2

3

premium

4

5

discount

AXP 0.99 Peers 5.57 • Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. • AXP trades at a significant discount to its peers. Earnings Growth

1

2

3

4

lower

5 higher

AXP 1.98 Peers 2.20 • Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. • However, AXP is expected to trail its peers on the basis of its earnings growth rate. Sales Growth

discount

AXP 2.06 Peers 2.03 • Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. • AXP is trading at a valuation on par with its industry on this measurement.

3

AXP 9.09 Peers 7.89 • Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. • AXP is trading at a premium to its peers.

discount

AXP 3.35 Peers 2.19 • Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. • AXP is trading at a significant premium to its peers.

2

premium

discount

Price reflects the closing price as of the date listed, if available

RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS

1

Price/CashFlow

discount

2016

MOST RECENT RATINGS CHANGES Date Price Action 11/16/16 $71.68 Upgrade 2/1/16 $54.70 Downgrade 1/12/15 $89.50 No Change

Price as of 1/12/2017 $76.88

VALUATION BUY. The current P/E ratio indicates a premium compared to an average of 13.28 for the Consumer Finance industry and a significant discount compared to the S&P 500 average of 25.49. For additional comparison, its price-to-book ratio of 3.35 indicates a premium versus the S&P 500 average of 2.84 and a premium versus the industry average of 2.19. The current price-to-sales ratio is similar to the S&P 500 average, but it is above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, AMERICAN EXPRESS CO proves to trade at a premium to investment alternatives within the industry.

$90

$60 2015

Beta 1.20

1

2

3

lower

4

5 higher

AXP -0.70 Peers 6.11 • Lower. A sales growth rate that trails the industry implies that a company is losing market share. • AXP significantly trails its peers on the basis of sales growth

DISCLAIMER:

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TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.

Report Date: January 15, 2017

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