American Express vs Visa Which Is More Profitable?

American Express and Visa are two major players in the credit card industry, each with their own strengths and weaknesses. American Express is known for its premium offerings and customer service, while Visa is the largest card network in the world with a vast global reach. Investors looking to add financial stocks to their portfolio may consider the stability and consistent growth of Visa, while those seeking potential for higher returns may be drawn to American Express' brand loyalty and innovative products.

American Express or Visa?

When comparing American Express and Visa, 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 Visa.

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 Visa has a dividend yield of 0.5%. 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, Visa reports a 5-year dividend growth of 16.27% year and a payout ratio of 21.36%.

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 Visa's P/E ratio at 31.48. 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 Visa's P/B ratio is 15.88.

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 Visa's is 0.73%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with American Express's ROE at 34.09% and Visa's ROE at 49.64%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $290.49 for American Express and $309.30 for Visa. Over the past year, American Express's prices ranged from $153.50 to $296.83, with a yearly change of 93.37%. Visa's prices fluctuated between $244.11 and $312.39, with a yearly change of 27.97%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.