AXP-AMERICAN EXPRESS COMPANY-Today this stock was down 12.10%.  That’s awesome.  I bought 22 shares at a cost basis of 61.  I also bought 55 shares at 54.5.  The company is totally beleaguered.  One piece of bad news after another…but none of it is THAT bad.

Let’s review the stock from the price of 55.  What is our hypothetical, conservative 10 year rate of return.

Cap is now 54.19b.  Short interest is at 1.72%.  P/E is 12.45, trailing 12 months.  Dividend is at .29 or 1.16 per year.

Earnings are down this quarter due to some one time write downs.  We also have problems in the near term because of the Costco business losses.  We’ll call the dividend 10.04 after 10 and tax.

Book per share is 21.67.  Thus we have price to book of 2.538.  We have EPS of 4.377 trailing 12 months…low because of this quarter’s write downs.  earnings expectations of 5.5 in 2016 and 5.5-5.7 ish in 2017.  Book grows at 7.49.  EPS growth is at 7.48 over next 3-5.  Return on equity of course is always high, but we’ll call it 25.

Debt to equity is kinda unknown.  They have been seriously buying shares back.

Let’s go really conservative.  Let’s say we just take that 4.377 figure and run with it…we’re definitely looking up from here.  We’ll show 20% growth next year even with the costco losses because of that write down…next year is gonna look like a coup.  So, let’s be reasonable, in 10 years, we’ll have book of 44.62 (probably) and dividend earnings of 10.04, we could easily have earnings of 11.155, and Amex, using a reasonable P/E of 15, we’d have a price point of 167.325 plus that dividend of 10.04 f0r a price of 177.365.  That gives us a long term growth rate of 12.42…and we are using very conservative view here.  Ya, it’s not my 15%, and that 2.5% makes a huge difference to me.  But man-o-man, it’s gonna be a great investment.  There’s no reason for the company to go any lower, and if it does, it’s just speculation.

I’ll gauge this investment again in 2 years.