AXP
American Express Company
$311.78
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 7.0% above fair value
You pay
$311.78
Bear
$204.02
Fair
$291.46
Bull
$378.90
Bear
$204.02
-34.6%
ROTCE 20.0% → 2.56x TBV
Fair
$291.46
-6.5%
ROTCE 25.0% → 4.00x TBV
Bull
$378.90
+21.5%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (38.0%) vs. cost of equity (10.3%)
Implied Market Multiple
7.46x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $374.73 from 57 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $291.46 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 $374.73 (from 57 analysts). Our estimate is 34% 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