American Express Company (AXP): investment thesis checklist
What a value investor writing down why they own American Express Company would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 43.8% in FY2023; between 13.0% and 43.8% over 5 filed years, median 21.1%. Does the thesis need it to stay inside that range?
- Return on equity: 32.4% in FY2025; between 13.6% and 36.3% over 10 filed years, median 30.1%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 6.2% in FY2025; between 4.2% and 17.3% over 10 filed years, median 10.1%. Does the thesis need it to stay inside that range?
- EV to EBIT: 8.14x in FY2023; between 8.14x and 17.27x over 5 filed years, median 12.10x. Does the thesis need it to stay inside that range?
- Price to earnings: 24.05x in FY2025; between 12.05x and 33.21x over 10 filed years, median 16.52x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 14.9% in FY2025; between 1.8% and 14.9% over 10 filed years, median 4.0%. Does the thesis need it to stay inside that range?
- Share count change: -2.4% in FY2025; between -6.8% and -2.0% over 10 filed years, median -3.1%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from American Express Company's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 2.2x
Today 1.76x. Replayed over 7 filed years, it would have broken in 1; most recently FY2019, at 2.82x (10-K, filed 2020-02-13).
Revenue Growth 1Y stays at or above 0%
Today 9.52%. Replayed over 10 filed years, it would have broken in 1; most recently FY2020, at -17.15% (10-K, filed 2021-02-12).
Dividend Rate stays at or above $3.76
Today $3.80. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 2.2x.
- A filed year in which revenue growth 1y fell below 0%.
- A filed year in which dividend rate fell below $3.76.
4. The published tests it meets today
Of 30 tests value investors published: 1 met, 24 not met, 5 we could not complete. Counts, never a score.
Meets: Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.