Upbound Group (NASDAQ:UPBD) versus American Express (NYSE:AXP) Financial Analysis

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for American Express and Upbound Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Express	1	11	11	1	2.50
Upbound Group	0	3	2	0	2.40

American Express presently has a consensus target price of $372.95, indicating a potential upside of 10.73%. Upbound Group has a consensus target price of $30.67, indicating a potential upside of 58.16%. Given Upbound Group’s higher probable upside, analysts plainly believe Upbound Group is more favorable than American Express.

Dividends

American Express pays an annual dividend of $3.80 per share and has a dividend yield of 1.1%. Upbound Group pays an annual dividend of $1.56 per share and has a dividend yield of 8.0%. American Express pays out 23.1% of its earnings in the form of a dividend. Upbound Group pays out 101.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Express has increased its dividend for 4 consecutive years and Upbound Group has increased its dividend for 5 consecutive years. Upbound Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

84.3% of American Express shares are owned by institutional investors. Comparatively, 90.3% of Upbound Group shares are owned by institutional investors. 0.1% of American Express shares are owned by company insiders. Comparatively, 1.2% of Upbound Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares American Express and Upbound Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Express	$72.23 billion	3.15	$10.83 billion	$16.48	20.44
Upbound Group	$4.74 billion	0.24	$73.24 million	$1.54	12.59

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

Risk and Volatility

American Express has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Upbound Group has a beta of 1.79, indicating that its share price is 79% more volatile than the S&P 500.

Profitability

This table compares American Express and Upbound Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Express	15.07%	34.12%	3.77%
Upbound Group	1.90%	34.53%	7.69%

Summary

American Express beats Upbound Group on 10 of the 18 factors compared between the two stocks.

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.

About Upbound Group

Upbound Group, Inc. leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico, and Franchising. The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels. It offers furniture comprising mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories. It also provides merchandise on an installment sales basis; and the lease-to-own transaction to consumers who do not qualify for traditional financing, the lease to-own transaction through staffed or unstaffed kiosks located in third-party retailer's locations, and other virtual options. It operates retail installment sales stores under the Get It Now and Home Choice names; lease-to-own and franchised lease-to-own stores under the Rent-A-Centre, ColorTyme, and RimTyme names; and company-owned stores and e-commerce platform through rentacenter.com. The company was formerly known as Rent-A-Center, Inc. and changed its name to Upbound Group, Inc. in February 2023. Upbound Group, Inc. was founded in 1960 and is based in Plano, Texas.