American Express (NYSE: AXP) and Green Dot Corporation (NYSE:GDOT) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitabiliy and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
American Express 14.11% 21.90% 2.86%
Green Dot Corporation 6.65% 10.11% 4.07%

Dividends

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

Risk & Volatility

American Express has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Green Dot Corporation has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Insider and Institutional Ownership

83.6% of American Express shares are held by institutional investors. Comparatively, 81.0% of Green Dot Corporation shares are held by institutional investors. 0.7% of American Express shares are held by company insiders. Comparatively, 11.0% of Green Dot Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for American Express and Green Dot Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Express 4 13 10 0 2.22
Green Dot Corporation 0 3 6 0 2.67

American Express presently has a consensus target price of $84.33, indicating a potential downside of 1.90%. Green Dot Corporation has a consensus target price of $39.29, indicating a potential downside of 0.97%. Given Green Dot Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Green Dot Corporation is more favorable than American Express.

Earnings and Valuation

This table compares American Express and Green Dot Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Express $29.48 billion 2.58 $4.32 billion $4.89 17.58
Green Dot Corporation $743.75 million 2.65 $102.86 million $0.95 41.76

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

Summary

American Express beats Green Dot Corporation on 9 of the 17 factors compared between the two stocks.

About American Express

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.

About Green Dot Corporation

Green Dot Corporation (Green Dot) is a pro-consumer financial technology innovator. The Company is a provider of reloadable prepaid debit cards and cash reload processing services in the United States. The Company operates through two segments: Account Services, and Processing and Settlement Services. The Company’s account services segment includes branded deposit account programs, including Green Dot-branded and affinity-branded general purpose reloadable (GPR) card accounts; checking accounts, open-loop gift cards and secured credit cards. The Company’s processing and settlement services include its money processing services, which consists of reload services and 1099 disbursements, and its tax refund processing services. It also has operations in the mobile technology and mobile banking with GoBank mobile checking account. Through its subsidiary, SBBT Holdings, LLC (TPG), it also operates as a processor of tax refund disbursements in the United States.

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