AXP
American Express Company
$308.10
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 24.9% above fair value
You pay
$308.10
Bear
$172.63
Fair
$246.62
Bull
$320.61
Bear
$172.63
-44.0%
ROTCE 20.0% → 2.55x TBV
Fair
$246.62
-20.0%
ROTCE 25.0% → 3.35x TBV
Bull
$320.61
+4.1%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
38.0%
10.3%
Key Value Driver
ROTCE (38.0%) vs. cost of equity (10.3%)
Implied Market Multiple
7.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (57 analysts)
$368.00
Divergence from AlphaVal
33%
Summary
With ROTCE of 38.0% vs. 10.3% cost of equity, fair P/TBV is 3.35x on $42.22 tangible book, implying $246.62 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $368.00 (from 57 analysts). Our estimate is 33% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly