Critical Contrast: American Express (NYSE:AXP) versus FirstCash (NASDAQ:FCFS)

FirstCash (NASDAQ:FCFS) and American Express (NYSE:AXP) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Valuation & Earnings

This table compares FirstCash and American Express”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstCash	$3.66 billion	2.69	$330.38 million	$8.76	25.96
American Express	$72.23 billion	3.01	$10.83 billion	$16.48	19.53

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

Institutional & Insider Ownership

80.3% of FirstCash shares are held by institutional investors. Comparatively, 84.3% of American Express shares are held by institutional investors. 2.9% of FirstCash shares are held by company insiders. Comparatively, 0.1% of American Express shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares FirstCash and American Express’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstCash	9.42%	19.65%	8.38%
American Express	15.07%	34.12%	3.77%

Analyst Recommendations

This is a breakdown of current recommendations for FirstCash and American Express, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstCash	0	1	4	0	2.80
American Express	1	10	12	1	2.54

FirstCash presently has a consensus price target of $249.00, suggesting a potential upside of 9.51%. American Express has a consensus price target of $373.32, suggesting a potential upside of 15.96%. Given American Express’ higher probable upside, analysts plainly believe American Express is more favorable than FirstCash.

Volatility & Risk

FirstCash has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, American Express has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Dividends

FirstCash pays an annual dividend of $1.68 per share and has a dividend yield of 0.7%. American Express pays an annual dividend of $3.80 per share and has a dividend yield of 1.2%. FirstCash pays out 19.2% of its earnings in the form of a dividend. American Express pays out 23.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. FirstCash has increased its dividend for 8 consecutive years and American Express has increased its dividend for 4 consecutive years.

Summary

American Express beats FirstCash on 12 of the 18 factors compared between the two stocks.

About FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.

About American Express

American Express Company, together with its subsidiaries, operates as integrated payments company in the United States, Europe, the Middle East and Africa, the Asia Pacific, Australia, New Zealand, Latin America, Canada, the Caribbean, and Internationally. It operates through four segments: U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services. The company’s products and services include credit card, charge card, banking, and other payment and financing products; network services; expense management products and services; and travel and lifestyle services. It also provides merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs. In addition, the company operates lounges at airports under Centurion Lounge brand name. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York.