Moody’s (NYSE:MCO) & American Express (NYSE:AXP) Head-To-Head Comparison

Moody’s (NYSE:MCO) and American Express (NYSE:AXP) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Earnings & Valuation

This table compares Moody’s and American Express”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.09 billion	12.22	$2.06 billion	$12.44	39.04
American Express	$65.95 billion	4.02	$10.13 billion	$14.90	25.83

American Express has higher revenue and earnings than Moody’s. American Express is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.

Dividends

Moody’s pays an annual dividend of $3.76 per share and has a dividend yield of 0.8%. American Express pays an annual dividend of $3.28 per share and has a dividend yield of 0.9%. Moody’s pays out 30.2% of its earnings in the form of a dividend. American Express pays out 22.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Moody’s has raised its dividend for 16 consecutive years and American Express has raised its dividend for 4 consecutive years. American Express is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Moody’s has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500. Comparatively, American Express has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Profitability

This table compares Moody’s and American Express’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moody’s	29.92%	63.58%	16.34%
American Express	14.97%	33.41%	3.68%

Insider and Institutional Ownership

92.1% of Moody’s shares are held by institutional investors. Comparatively, 84.3% of American Express shares are held by institutional investors. 0.1% of Moody’s shares are held by company insiders. Comparatively, 0.2% of American Express shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Moody’s and American Express, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	6	12	1	2.74
American Express	1	15	9	0	2.32

Moody’s presently has a consensus target price of $543.07, suggesting a potential upside of 11.83%. American Express has a consensus target price of $332.65, suggesting a potential downside of 13.57%. Given Moody’s’ stronger consensus rating and higher possible upside, research analysts clearly believe Moody’s is more favorable than American Express.

Summary

Moody’s beats American Express on 12 of the 18 factors compared between the two stocks.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.

About American Express

American Express Company, together with its subsidiaries, operates as integrated payments company in the United States, Europe, the Middle East and Africa, the Asia Pacific, Australia, New Zealand, Latin America, Canada, the Caribbean, and Internationally. It operates through four segments: U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services. The company’s products and services include credit card, charge card, banking, and other payment and financing products; network services; expense management products and services; and travel and lifestyle services. It also provides merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs. In addition, the company operates lounges at airports under Centurion Lounge brand name. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York.