Is American Express Co. overvalued or undervalued?

As of 30 June 2025, the valuation grade for American Express Co. has moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its P/E ratio of 21, which is higher than the peer average of 22.08 for Discover Financial Services, and its EV to EBITDA ratio of 7.88, which also exceeds the peer average of 7.51. Additionally, the PEG ratio stands at 1.17, suggesting that the stock may not be a bargain relative to its growth prospects.
In comparison to its peers, American Express Co. is positioned alongside United Rentals, Inc. with a significantly higher P/E ratio of 40.65, indicating that both companies are perceived as expensive in their respective markets. Despite this, American Express has outperformed the S&P 500 over multiple periods, with a 1-year return of 30.32% compared to the S&P 500's 17.14%, and a 5-year return of 230.31% against 96.61% for the index. This strong performance may suggest that the market is willing to pay a premium for its growth potential, yet the current valuation metrics indicate that it is overvalued.