Describe the company’s history, products, and major competitors by accessing the

Question

Describe the company’s history, products, and major competitors by accessing the Mergent Ashford University Library online database which offers company financials, descriptions, history, property, subsidiaries, officers and directors and by accessing the Business Insights database. (View the Mergent tipsheet and Business Insights tipsheet documents for suggested methods of searching Ashford University Library databases generally as well as specific advice for searching these two databases).

Assess the financial performance and condition of the organization.

American Express Company GlobalData» American Express Company - Financial and Strategic Analysis Review Publication Date: Nov-2017 Reference Code: GDFS34527FSA Company Snapshot Company Overview Key Information American Express Company, Key Information Web Address Financial year-end Number of Em NYSE Source: GlobalData www.americanexpress.com December 56,400 AXP American Express Company (Amex or 'the company') is a leading global provider of travel related services, payment services, financial advisory services and banking services. Amex operates in North America, Europe and Asia Pacifio region and its products are offered in more than 140 countries. It is headquartered in New York City, New York. ees SWOT Analysis American Express Company, SWOT Analysis Key Ratios American Express Company, Key Ratios Strengths Weaknesses 17.06Ability to forge partnerships Lack of point-of-sale debit across the world card services EVIEBITDA Return on Equity (%) Debt/Equity Operating profit margin (%) Dividend Yield Note: Above ratios are based on share price as of 10-Nov-2017 Source : GlobalData Diversified revenue streams Weak profit management 5.26 Spend-centric model in credit cards business Opportunities Threats Growing e-commerce sales Competitors' converging business practices Huge opportunity in global small business spending Increasing penetration of alternative payment platforms Share Data American Express Company, Share Data Price (USD) as on 10-Nov-2017 EPS (USD) Book value per share (USD) Shares Outstanding (in million) Source: GlobalData 93.52 Dodd-Frank regulation Source: GlobalData 22.68 935 Financial Performance The company reported revenues of (US Dollars) US$32,717 million for the fiscal year ended December 2016 (FY2016), a decrease of 1.7% over FY2015. In FY2016, the company's operating margin was 24.7% compared to an operating margin of 23.8% in FY2015 In FY2016, the company recorded a net margin of 16.5%, compared to a net margin of 15.5% in FY2015 The company reported revenues of US$8,038 million for the first quarter ended March 2017, a decrease of 1.6% over the previous quarter Performance Chart American Express Company, Performance Chart (2012- 40,000.0 5,000.0 5 30,000.0 25,000.0 20,000.o e 15,000.0 10,000.0 5,000.0 o.0 2012 2013 2015 2016 Revenue Net Income Source : GlobalData

Explanation / Answer

The American Express Company, also known as Amex, is an American multinational financial services corporation headquartered in Three World Financial Center in New York City. The company was founded in 1850 and is one of the 30 components of the Dow Jones Industrial Average. The company is best known for its charge card, credit card, and traveler's cheque businesses.

The American Express Company (AXP) is a global financial services company that competes in the credit card space with rivals such as Discover Financial Services (DFS), Visa, Inc. (V), and MasterCard Worldwide (MA).

In 2016, credit cards using the American Express network accounted for 22.9% of the total dollar volume of credit card transactions in the US. As of December 31, 2017, the company had 112.8 million cards in force, including 50 million cards in force in the United States, each with an average annual spending of $18,519.

Visa and MasterCard are not Financiers

Visa and MasterCard act as intermediaries in the credit card space. They don’t directly finance credit card transactions. Instead, they allow financial institutions to participate in their networks and issue credit cards that bear the “Visa” or “MasterCard” brand name. When you buy something with your “Visa” or “MasterCard”-branded credit card, the merchant you buy from will process the transaction, using the Visa or MasterCard network, after your issuing financial institution approves the transaction, indicating that you have enough credit on your account. The business establishment will then approve your purchase.

In return for their service, Visa and MasterCard receive a processing and service fee from the financial institution that issues the card. The issuing bank also gets a part of the transaction value as a fee and the merchant’s bank also receives a fee for its service. As for consumers, they pay the issuing institutions in the form of card annual fees, monthly charges for carrying a balance, and late fees.

American Express and Discover Issue Cards

Discover Financial Services and American Express issue cards themselves and thus bear the financing risk. They charge customers for the use of the card and also charges merchants a fee. When you buy something on credit using your Discover brand name card, the merchant gets approval for the transaction from Discover directly. This sort of system is called an open-loop system, rather than the so-called closed-loop system associated with the Visa and MasterCard business model.

If you see the Financial Statement of AMEX you will find that it have been inconsistent in terms of sales revenue In Dec 2017 Company had a loss of $1 billion approx. which clearly show that there are few thing which company should change and you can get an idea if you see the AMEX weaknesses It clearly says that AMEX card is not acceptable at all POS- Point of Sales machine with merchants. So it means company should develop a card which should be accepted as any outlet with any POS. This can help company to improve their market share worldwide also they should come up with payment wallet etc. a more digital mode to generate more sales revenue.

Comparing the results to its competitors, American Express reported Total Revenue increase in the 1 quarter 2018 by 20.9 % year on year.

The sales growth was above American Express's competitors' average revenue growth of 12.55 %, recorded in the same quarter.

In terms of capital structure of the company also I find debt equity ratio is quite high and company should look in to it.

In a competitive market company is competing with leading top banks in the world in such case with unique USP may help you to get more no. of customers however if company will not able to provide POS at every door steps it will be slightly challenge for company to meet the expectation. Also company has weak profit management which is again a change to convert revenue into profit.

Company should also revised their capital structure show that they can reduce debt liabilities as cost od debt is looking bit high. Company should also look for expansion globally so that they can tap the major market of the world.

AmEx will suspend its buyback program for the first half of the year. The CEO said the company made this decision to rebuild its capital because of the upfront charge triggered by the new tax law.

Including the impact from the recent tax legislation, American Express reported a net loss of $1.2 billion or $1.41 per share in the fourth quarter. In the year-ago quarter, the company reported a net income of $825 million or 88 cents per share.

1 Year Target                               

111

Today's High / Low

$ 99.61 / $ 98.22

Share Volume

2,710,229

90 Day Avg. Daily Volume

3,745,057

Previous Close

$ 98.30

52 Week High / Low

$ 103.24 / $ 77.77

Market Cap

84,530,586,641

P/E Ratio

28.73

Forward P/E (1y)

13.59

Earnings Per Share (EPS)

$ 3.42

Annualized Dividend

$ 1.40

Ex-Dividend Date

7/5/2018

Dividend Payment Date

8/10/2018

Current Yield

1.42 %

Beta

0.96

American Express also reported quarterly earnings and revenue that beat analysts' expectations on Thursday.

Here's how the company did, compared with what Wall Street expected:

•EPS: $1.58 vs. $1.54 expected, according to Thomson Reuters

•Revenue: $8.84 billion vs. $8.72 billion expected, according to Thomson Reuters

The company's stock dipped more than 2 percent after it released its filing with the Securities and Exchange Commission.

Other companies have also reported sizable losses, citing a one-time charge from the new tax law. Citigroup, for instance, reported a charge of roughly $19 billion in the company's recent quarterly earnings statement. Bank of America posted a$2.9 billion charge relating to the new law. And J.P. Morgan Chase took a $2.4 billion hit from the law.

Apart from their marketing strategy company should also work on their Financial strategy as company is looking not in good condition where there is slightly improvement of revenue however Net Income and EPS is drastically Falling. There will be a possibility of high cost of debt which is pulling EBIT to down and which is directly impacting Company shareholder return so in such case company should revised their capital structure.

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