American Express (NYSE: AXP) and Blackhawk Network Holdings (NASDAQ:HAWK) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitabiliy, risk, institutional ownership, analyst recommendations and dividends.

Risk & Volatility

American Express has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500. Comparatively, Blackhawk Network Holdings has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.

Profitability

This table compares American Express and Blackhawk Network Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Express 14.11% 21.94% 2.86%
Blackhawk Network Holdings -0.01% 5.53% 1.54%

Dividends

American Express pays an annual dividend of $1.28 per share and has a dividend yield of 1.5%. Blackhawk Network Holdings does not pay a dividend. American Express pays out 26.2% of its earnings in the form of a dividend. American Express has increased its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of current ratings for American Express and Blackhawk Network Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Express 4 13 10 0 2.22
Blackhawk Network Holdings 0 4 8 0 2.67

American Express currently has a consensus price target of $84.33, indicating a potential downside of 1.47%. Blackhawk Network Holdings has a consensus price target of $44.58, indicating a potential downside of 0.93%. Given Blackhawk Network Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe Blackhawk Network Holdings is more favorable than American Express.

Valuation & Earnings

This table compares American Express and Blackhawk Network Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Express $29.60 billion 2.58 $4.37 billion $4.89 17.50
Blackhawk Network Holdings $1.94 billion 1.31 $138.65 million ($0.01) -4,500.00

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

Institutional & Insider Ownership

82.6% of American Express shares are held by institutional investors. Comparatively, 99.6% of Blackhawk Network Holdings shares are held by institutional investors. 0.7% of American Express shares are held by insiders. Comparatively, 3.8% of Blackhawk Network Holdings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

American Express beats Blackhawk Network Holdings on 11 of the 17 factors compared between the two stocks.

American Express Company Profile

American Express Company, together with its subsidiaries, is a global services company. The Company’s principal products and services are charge and credit card products, and travel-related services, which are offered to consumers and businesses around the world. Its segments include the U.S. Consumer Services (USCS), International Consumer and Network Services (ICNS), Global Commercial Services (GCS) and Global Merchant Services (GMS). The USCS includes the U.S. Consumer Card Services business and consumer travel services in the United States. The ICNS includes the International Consumer Card Services business, Global Network Services business and consumer travel services outside the United States. The GCS includes the Global Corporate Payments business, small business services businesses in the United States and internationally, financing products and foreign exchange services operations. The GMS includes the Global Merchant Services business and global loyalty coalition businesses.

Blackhawk Network Holdings Company Profile

Blackhawk Network Holdings, Inc. is a prepaid payment network. The Company operates through three segments: U.S. Retail, International, and Incentives & Rewards. The U.S. Retail segment is engaged in the sale of prepaid products to consumers at its retail distribution partners and online and the sale of telecom handsets to retail distribution partners for resale to consumers. Its Incentives & Rewards segment is engaged in the sale of prepaid products, software and services to its business clients. It distributes closed loop gift cards in categories, including digital media and e-commerce, dining, electronics, entertainment, fashion and travel. It distributes a range of prepaid wireless or cellular cards. It also provides reloads for reloadable prepaid products, including prepaid telecom accounts and general-purpose reloadable cards. Its incentives businesses provide software, consulting services, program management, reward processing and reward fulfillment to its business clients.

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