American Express vs Goldman Sachs Which Is a Smarter Choice?

American Express and Goldman Sachs are two iconic financial institutions with a long history of success in the stock market. American Express is known for its credit card services and global financial services, while Goldman Sachs is a leading investment banking and financial services company. Both companies have shown strong performance in the stock market, but they have their differences in terms of business model and target market. Investors may consider factors such as stability, growth potential, and market trends when comparing these two stocks.

American Express or Goldman Sachs?

When comparing American Express and Goldman Sachs, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between American Express and Goldman Sachs.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. American Express has a dividend yield of 0.92%, while Goldman Sachs has a dividend yield of 1.87%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. American Express reports a 5-year dividend growth of 10.01% year and a payout ratio of 19.64%. On the other hand, Goldman Sachs reports a 5-year dividend growth of 27.23% year and a payout ratio of 36.22%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with American Express P/E ratio at 20.97 and Goldman Sachs's P/E ratio at 16.07. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. American Express P/B ratio is 6.98 while Goldman Sachs's P/B ratio is 1.62.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, American Express has seen a 5-year revenue growth of 0.74%, while Goldman Sachs's is 0.57%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with American Express's ROE at 34.09% and Goldman Sachs's ROE at 10.23%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $290.49 for American Express and $596.16 for Goldman Sachs. Over the past year, American Express's prices ranged from $153.50 to $296.83, with a yearly change of 93.37%. Goldman Sachs's prices fluctuated between $323.53 and $607.15, with a yearly change of 87.66%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.