Analyzing Lufax (NYSE:LU) and American Express (NYSE:AXP)

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for American Express and Lufax, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Express	1	13	17	1	2.56
Lufax	1	2	1	0	2.00

American Express currently has a consensus target price of $365.22, indicating a potential upside of 13.14%. Lufax has a consensus target price of $17.00, indicating a potential upside of 140.55%. Given Lufax’s higher possible upside, analysts clearly believe Lufax is more favorable than American Express.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Express	15.80%	34.19%	3.83%
Lufax	N/A	N/A	N/A

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Express	$77.59 billion	2.79	$10.83 billion	$17.76	18.18
Lufax	$21.45 billion	0.03	-$291.79 million	($4.47)	-1.58

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

Volatility & Risk

American Express has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Lufax has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Dividends

American Express pays an annual dividend of $3.80 per share and has a dividend yield of 1.2%. Lufax pays an annual dividend of $0.12 per share and has a dividend yield of 1.7%. American Express pays out 21.4% of its earnings in the form of a dividend. Lufax pays out -2.7% 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. American Express has raised its dividend for 4 consecutive years. Lufax is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

84.3% of American Express shares are owned by institutional investors. Comparatively, 69.1% of Lufax shares are owned by institutional investors. 0.1% of American Express shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

American Express beats Lufax on 15 of the 18 factors compared between the two stocks.

About American Express

American Express Company is a global payments and financial services company that operates a card-issuing business and a payments network. Its products and services include consumer, small-business and corporate cards, payment processing, lending, travel services and expense-management solutions. Founded in 1850 as an express mail business, the company expanded into financial services and became known for its charge cards and travel-related services. Today, it serves cardholders and businesses in the United States and markets around the world, connecting customers, merchants and financial institutions through its network.

About Lufax

Lufax Holding Ltd. is a China-based financial technology company that provides technology-enabled financial services. Its platform connects individual and small-business borrowers with financial institutions and other funding partners, helping customers access credit and related services. The company also offers wealth management services, including access to investment products for retail customers. Lufax was established in 2011 as part of Ping An Insurance Group and has developed its business around China’s financial services market.