American Express Company (NYSE:AXP) Initiated with a Sell Rating

Stock Traders Daily has initiated shares of American Express Company (NYSE:AXP) with a sell rating based on valuation.  Using an earnings growth model that compares PE multiples to earnings growth we cannot justify buying American Express and based on valuation believe shares will fall over the coming year.

Analysts do expect a very solid quarter this coming quarter, but even with that the yearly earnings growth for American Express will be below 3% after having been in negative territory recently.  This also assumes that analysts are correct and American Express actually has the blowout quarter they expect.

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At first glance the PE multiple does not look expensive, but when you compare it to the dismal growth rate American Express has provided over the past few quarters and that it is expected to continue to demonstrate this year and next year that otherwise low-looking PE multiple begins to look rich.

Although we believe American Express is a good company in general we also know that share prices of good companies also fall and if market conditions cause investors to pay closer attention to valuation they will shy away from stocks whose earnings growth rate is as low relative to its PE multiple as AXP.  We believe that will become reality too.  Review The Investment Rate for details on this.

Technical Summary

Term →Near Mid Long
Bias Strong Strong Neutral
P1 58.99 44.04 48.32
P2 60.38 53.56 56.86
P3 61.21 62.88 65.17

Long Term Trading Plans for AXP

March 21, 2016, 11:03 am ET

The technical Summary and associated Trading Plans for AXP listed below will help you make important timing decisions for your trades. This data is based on our proprietary analysis for AXP. In addition we offer Market Timing Models and Stock Filters in the links above which may increase the proficiency of the decisions you make.

AXP - (Long) Support Plan

Buy over 56.86 target 65.17 stop loss @ 56.6.
The technical summary data tells us to buy AXP near 56.86 with an upside target of 65.17. This data also tells us to set a stop loss @ 56.6 to protect against excessive loss in case the stock begins to move against the trade. 56.86 is the first level of support below 61.22 , and by rule, any test of support is a buy signal. In this case, support 56.86 is being tested, a buy signal would exist.

AXP - (Short) Resistance Plan

Short under 65.17 target 56.86 stop loss @ 65.43
The technical summary data is suggesting a short of AXP as it gets near 65.17 with a downside target of 56.86. We should have a stop loss in place at 65.43 though. 65.17 is the first level of resistance above 61.22, and by rule, any test of resistance is a short signal. In this case, if resistance 65.17 is being tested, a short signal would exist.

AXP Long Term Analysis

AXP EPS Analysis

AXP Dividend Chart

AXP Revenue chart

AXP Growth rate - Quarterly

AXP Growth rate - Yearly

AXP PE chart

AXP PEG chart