American Express CompanyAXPNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Revenue projections show 12% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Hold

Fair Value: $296.86 per share(market-calibrated)

-3.4%

Upside to Fair Value

Current

$307.43

Pure Model

$296.04

Fair Value

$296.86

Bull Case

$337.12

Bear Case

$252.94

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

2.85%

Calibrated Growth

2.55%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $296.04.

What's Driving This Ratingfor AXP

↓

CapEx normalizing toward maintenance

Historical CapEx is 2.31% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$735M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 18.98% — below the sector mature average of 28.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $22.7B (25.04% margin).

→

Moderate revenue growth

Analyst consensus projects -1.73% revenue growth, fading to 2.50% by Year 10. Revenue reaches $90.5B (vs $80.5B today).

✓

Model and market roughly agree

Market-implied terminal growth of 2.85% is close to the model's 2.50% (only 35bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.76% indicates efficient cash generation. FCF reaches $18.1B by Year 10 (20.02% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.13

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.58%

Cost of Debt

Pre-tax Cost of Debt7.60%

Tax Rate21.47%

After-tax Cost of Debt5.97%

Equity Weight (E/V)78.72%

Debt Weight (D/V)21.28%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (78.72% × 9.58%) + (21.28% × 5.97%)

= 8.81%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$79.1B	$93.0B	$82.2B	$84.7B	$90.5B
EBIT	$15.0B	$17.7B	$15.6B	$18.8B	$22.7B
Tax	$3.2B	$3.8B	$3.3B	$4.0B	$4.9B
NOPAT	$11.8B	$13.9B	$12.2B	$14.8B	$17.8B
+ Depreciation	$1.7B	$1.9B	$1.7B	$1.8B	$1.9B
- Capex	$1.8B	$2.0B	$1.6B	$1.5B	$1.4B
- Δ NWC	-$139M	$694M	$92M	$140M	$221M
Free Cash Flow	$11.8B	$13.1B	$12.3B	$14.9B	$18.1B
Discount Factor	0.919	0.776	0.656	0.554	0.430
Present Value	$10.8B	$10.2B	$8.0B	$8.3B	$7.8B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$18.1B

Terminal Growth Rate2.50%

WACC8.81%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$294.3B

PV of Terminal Value$126.5B

Exit Multiple Method

Year 10 EBITDA$24.6B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$294.7B

PV of Terminal Value$126.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$89.2B

PV of Terminal Value$126.5B

Enterprise Value$215.7B

(-) Net Debt$10.1B

Equity Value$205.7B

Shares Outstanding695M

Price per Share$295.92

Exit Multiple Method

PV of Projected FCFs$89.2B

PV of Terminal Value$126.7B

Enterprise Value$215.9B

(-) Net Debt$10.1B

Equity Value$205.8B

Shares Outstanding695M

Price per Share$296.16

Pure Model Fair Value

$296.04

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
6.81%	$365.72	$379.83	$397.21	$419.16	$447.75
7.81%	$319.03	$328.07	$338.81	$351.79	$367.77
8.81%	$282.82	$288.94	$296.04	$304.36	$314.24
9.81%	$253.59	$257.92	$262.84	$268.48	$275.02
10.81%	$229.34	$232.50	$236.03	$240.02	$244.55

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$252.94

-17.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.41

Base Case

$296.04

-3.7% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.13

Bull Case

$337.12

9.7% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.96

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-1.73%

Year 3 Revenue Growth8.06%

Year 5 Revenue Growth1.13%

Year 7 Revenue Growth1.68%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin18.98%

Terminal EBIT Margin28.00%

Tax Rate21.47%

Historical Capex / Rev2.31%

Terminal Capex / Rev1.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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