American Express vs Mastercard

American Express and Mastercard are two leading companies in the financial services industry, both offering credit card services around the world. American Express is known for its exclusive membership and premium rewards program, while Mastercard is widely accepted and recognized for its secure transactions and innovative technology. Investors may be drawn to American Express for its brand reputation and loyal customer base, while Mastercard's global network and strong financial performance make it an attractive investment option. This comparison aims to analyze the growth potential and financial stability of both companies' stocks.

American Express or Mastercard?

When comparing American Express and Mastercard, 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 Mastercard.

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 0.97%, while Mastercard has a dividend yield of 0.65%. 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 19.17%. On the other hand, Mastercard reports a 5-year dividend growth of 17.92% year and a payout ratio of 18.79%.

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 20.19 and Mastercard's P/E ratio at 38.44. 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 6.72 while Mastercard's P/B ratio is 63.50.

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 Mastercard's is 0.85%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with American Express's ROE at 34.61% and Mastercard's ROE at 175.72%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $276.90 for American Express and $504.00 for Mastercard. Over the past year, American Express's prices ranged from $140.91 to $281.42, with a yearly change of 99.72%. Mastercard's prices fluctuated between $359.77 and $509.88, with a yearly change of 41.72%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.