Consumer Portfolio Services (NASDAQ: CPSS) and American Express (NYSE:AXP) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.
Dividends
American Express pays an annual dividend of $1.28 per share and has a dividend yield of 1.5%. Consumer Portfolio Services does not pay a dividend. American Express pays out 26.2% of its earnings in the form of a dividend. American Express has increased its dividend for 5 consecutive years.
Valuation and Earnings
This table compares Consumer Portfolio Services and American Express’ top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Consumer Portfolio Services | $159.50 million | 0.55 | $19.32 million | $0.85 | 4.58 |
| American Express | $29.48 billion | 2.53 | $4.32 billion | $4.89 | 17.24 |
American Express has higher revenue and earnings than Consumer Portfolio Services. Consumer Portfolio Services is trading at a lower price-to-earnings ratio than American Express, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent ratings and price targets for Consumer Portfolio Services and American Express, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Consumer Portfolio Services | 0 | 1 | 1 | 0 | 2.50 |
| American Express | 4 | 13 | 10 | 0 | 2.22 |
Consumer Portfolio Services presently has a consensus price target of $6.00, suggesting a potential upside of 54.24%. American Express has a consensus price target of $84.33, suggesting a potential upside of 0.05%. Given Consumer Portfolio Services’ stronger consensus rating and higher possible upside, research analysts clearly believe Consumer Portfolio Services is more favorable than American Express.
Profitability
This table compares Consumer Portfolio Services and American Express’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Consumer Portfolio Services | 5.49% | 12.76% | 0.99% |
| American Express | 14.11% | 21.90% | 2.86% |
Volatility & Risk
Consumer Portfolio Services has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500. Comparatively, American Express has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.
Institutional & Insider Ownership
48.1% of Consumer Portfolio Services shares are owned by institutional investors. Comparatively, 83.9% of American Express shares are owned by institutional investors. 37.5% of Consumer Portfolio Services shares are owned by insiders. Comparatively, 0.7% of American Express shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
American Express beats Consumer Portfolio Services on 12 of the 17 factors compared between the two stocks.
Consumer Portfolio Services Company Profile
Consumer Portfolio Services, Inc. is a specialty finance company. The Company’s business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans. Through its automobile contract purchases, the Company provides indirect financing to the customers of dealers having limited credit histories, low incomes or past credit problems, who it refers to as sub-prime customers. It serves as an alternative source of financing for dealers, facilitating sales to customers. The Company offers approximately eight financing programs to its dealership customers and prices each program according to the relative credit risk. Its financing programs are Bravo, First Time Buyer, Mercury/Delta, Standard, Alpha, Alpha Plus, Super Alpha and Preferred.
American Express Company Profile
American Express Company, together with its subsidiaries, is a global services company. The Company’s principal products and services are charge and credit card products, and travel-related services, which are offered to consumers and businesses around the world. Its segments include the U.S. Consumer Services (USCS), International Consumer and Network Services (ICNS), Global Commercial Services (GCS) and Global Merchant Services (GMS). The USCS includes the U.S. Consumer Card Services business and consumer travel services in the United States. The ICNS includes the International Consumer Card Services business, Global Network Services business and consumer travel services outside the United States. The GCS includes the Global Corporate Payments business, small business services businesses in the United States and internationally, financing products and foreign exchange services operations. The GMS includes the Global Merchant Services business and global loyalty coalition businesses.
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