Home > Comparison > Financial Services > AXP vs PYPL
The strategic rivalry between American Express Company and PayPal Holdings, Inc. shapes the evolution of the financial credit services industry. American Express operates as a capital-intensive global payments and travel services provider, emphasizing premium consumer and commercial segments. In contrast, PayPal leverages a technology-driven platform offering digital payment solutions with broad global reach. This analysis will assess which business model delivers superior risk-adjusted potential for a diversified investor portfolio.
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Companies Overview
American Express and PayPal hold pivotal roles in the evolving financial services landscape, shaping payment solutions globally.
American Express Company: Global Payment Network Leader
American Express operates as a leading credit and charge card issuer, generating revenue primarily from cardmember spending and merchant fees. Its three-segment structure spans consumer, commercial, and merchant services. In 2026, the company focuses on expanding its premium customer base and enhancing fraud prevention, reinforcing its competitive advantage in trusted, high-value transactions.
PayPal Holdings, Inc.: Digital Payments Innovator
PayPal runs a technology-driven digital payments platform, earning through transaction fees across multiple brands like Venmo and Braintree. It facilitates cross-border payments in over 200 markets and 100 currencies. The 2026 strategy centers on broadening market reach and integrating new digital wallets, underscoring its strength in scalable, multi-currency payment solutions.
Strategic Collision: Similarities & Divergences
American Express prioritizes a closed ecosystem with premium card services, while PayPal champions an open infrastructure supporting diverse digital payments. Their primary battleground is merchant and consumer payment processing. While Amex boasts a legacy of brand loyalty and financial services depth, PayPal leverages technology agility and global reach, reflecting distinct investment profiles amid the digital payment revolution.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | American Express Company (AXP) | PayPal Holdings, Inc. (PYPL) |
|---|---|---|
| Revenue | 80.5B | 33.3B |
| Cost of Revenue | 29.9B | 17.7B |
| Operating Expenses | 34.0B | 9.1B |
| Gross Profit | 50.6B | 15.7B |
| EBITDA | 16.6B | 7.7B |
| EBIT | 16.6B | 6.7B |
| Interest Expense | 2.8B | 0.4B |
| Net Income | 10.8B | 5.2B |
| EPS | 15.4 | 5.46 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company drives more efficient growth and stronger profitability through its core business operations.
American Express Company Analysis
American Express’s revenue climbed steadily from 44.4B in 2021 to 80.5B in 2025, reflecting robust expansion. Net income surged from 7.9B to 10.8B, though its gross profit dipped in the latest year, signaling margin pressure. The firm maintains strong gross and net margins near 63% and 13%, respectively, demonstrating resilient profitability despite some volatility.
PayPal Holdings, Inc. Analysis
PayPal’s revenue rose from 25.4B in 2021 to 33.3B in 2025, showing moderate growth. Net income nearly doubled from 4.2B to 5.2B, supported by improving margins. Its gross margin stands at 47%, lower than American Express but stable, while net margin improved to 15.7%. PayPal’s efficiency gains shine in its 36% EPS growth last year, highlighting accelerating earnings power.
Margin Strength vs. Growth Momentum
American Express leads in scale and margin dominance, boasting a higher gross margin and solid net income growth. PayPal offers faster EPS growth and a rising net margin, reflecting operational improvement. For investors, American Express suits those favoring margin power and scale. PayPal appeals to those seeking momentum in earnings growth and margin expansion.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies analyzed:
| Ratios | American Express Company (AXP) | PayPal Holdings, Inc. (PYPL) |
|---|---|---|
| ROE | 32.19% | 25.83% |
| ROIC | 4.35% | 14.95% |
| P/E | 23.86 | 10.70 |
| P/B | 7.68 | 2.76 |
| Current Ratio | 79.97 | 1.29 |
| Quick Ratio | 79.97 | 1.29 |
| D/E | 1.73 | 0.49 |
| Debt-to-Assets | 19.25% | 12.46% |
| Interest Coverage | 5.91 | 0 (not reported) |
| Asset Turnover | 0.27 | 0.41 |
| Fixed Asset Turnover | 0 (not reported) | 19.51 |
| Payout Ratio | 21.08% | 2.48% |
| Dividend Yield | 0.88% | 0.23% |
| Fiscal Year | 2025 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Ratios act as a company’s DNA, revealing hidden risks and operational excellence critical for informed investment decisions.
American Express Company
American Express delivers strong profitability with a 32.19% ROE and a solid 13.39% net margin, signaling operational efficiency. Its P/E of 23.86 appears fairly valued, though a high P/B of 7.68 and weak ROIC at 4.35% versus an 8.09% WACC suggest stretched capital returns. Dividend yield remains low at 0.88%, favoring cautious reinvestment over payouts.
PayPal Holdings, Inc.
PayPal shows robust profitability with a 25.83% ROE and superior 15.78% net margin. Its P/E of 10.7 indicates a relatively cheap valuation compared with peers. A healthy ROIC of 14.95% comfortably exceeds its 9.07% WACC, reflecting efficient capital use. Despite a modest 0.23% dividend yield, PayPal balances shareholder returns with growth investments in R&D.
Premium Valuation vs. Operational Safety
PayPal offers a better balance of risk and reward with favorable profitability, valuation, and capital efficiency. American Express, while profitable, shows stretched returns and weaker capital metrics. Investors seeking operational safety and value may prefer PayPal’s profile, while those favoring established brands face higher risk with AmEx.
Which one offers the Superior Shareholder Reward?
I observe American Express (AXP) delivers a consistent dividend yield around 1.2% with a stable payout ratio near 21%. Its free cash flow fully covers dividends, supporting sustainability. AXP also maintains moderate buybacks, enhancing total return. PayPal (PYPL) offers negligible dividends, focusing on reinvestment and growth, with a low payout ratio near 2.5%. PYPL’s buybacks are smaller but present, emphasizing capital allocation to innovation and expansion. Historically, AXP’s distribution model balances income and capital return, appealing to income-focused investors. PYPL’s reinvestment strategy suits growth seekers but carries higher risk. I conclude AXP offers a superior total shareholder reward in 2026 due to sustainable income plus buybacks.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of American Express and PayPal, highlighting their financial strengths and weaknesses side by side:
American Express shows robust cash flow and profitability with top scores in DCF, ROE, and ROA but struggles with high leverage and valuation concerns. PayPal offers a more balanced profile, maintaining strong profitability and better debt management, along with moderately attractive valuation metrics. I view PayPal’s diversified strengths as less risky, while American Express leans heavily on operational efficiency despite financial risk.
Bankruptcy Risk: Solvency Showdown
The Altman Z-Score comparison indicates PayPal is in the grey zone, slightly safer than American Express, which is in the distress zone, signaling greater bankruptcy risk amid economic headwinds:
Financial Health: Quality of Operations
Both firms score a 7 on the Piotroski F-Score, reflecting strong financial health and operational quality. Neither shows immediate red flags, but cautious monitoring remains prudent:
How are the two companies positioned?
This section dissects the operational DNA of American Express and PayPal by comparing their revenue distribution and internal strengths and weaknesses. The goal is to confront their economic moats and identify which model delivers the most resilient, sustainable competitive advantage today.
Revenue Segmentation: The Strategic Mix
This comparison dissects how American Express Company and PayPal Holdings, Inc. diversify their income streams and reveals where their primary sector bets lie:
American Express displays a balanced revenue mix, with $34.8B from Global Consumer Services Group and $16.9B from Global Commercial Services anchoring its portfolio. It diversifies well across International Card Services ($13B) and Merchant Network Services ($7.8B). PayPal, by contrast, pivots heavily on Transaction Revenue at $29.8B, dwarfing its $3.4B in Other Value Added Services. Amex’s segmentation reduces concentration risk, while PayPal’s reliance on transaction fees signals vulnerability to payment volume shifts.
Strengths and Weaknesses Comparison
This table compares the strengths and weaknesses of American Express Company and PayPal Holdings, Inc.:
American Express Company Strengths
- Diverse revenue streams across four main segments
- Strong net margin at 13.39%
- High return on equity at 32.19%
- Favorable debt to assets ratio at 19.25%
- Solid interest coverage at 5.91x
- Broad global presence with significant US and EMEA revenues
PayPal Holdings, Inc. Strengths
- Higher net margin at 15.78%
- Strong ROIC at 14.95%, above WACC
- Favorable debt to equity and debt to assets ratios
- High interest coverage at 15.27x
- Efficient fixed asset turnover at 19.51
- Balanced geographic revenue with growing international exposure
American Express Company Weaknesses
- Unfavorable ROIC below WACC at 4.35%
- High price-to-book ratio at 7.68 signals possible overvaluation
- Excessively high current ratio at 79.97, possibly inefficient asset use
- Elevated debt-to-equity at 1.73
- Low asset turnover at 0.27 limits operational efficiency
- Low dividend yield at 0.88%
PayPal Holdings, Inc. Weaknesses
- Asset turnover below ideal at 0.41
- Dividend yield is low at 0.23%
- Price-to-book ratio neutral at 2.76 may suggest limited undervaluation
- Some reliance on US market with 18.9B revenue versus 14.3B international
American Express exhibits strong profitability metrics and diversified revenue but struggles with capital efficiency and high leverage. PayPal shows robust capital returns and financial health with operational efficiency, though it faces moderate asset turnover and dividend yield challenges. These contrasts highlight differing strategic focuses on growth, risk, and capital allocation.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only reliable shield protecting long-term profits from relentless competition erosion. Let’s dissect the moats of two financial leaders:
American Express Company: Intangible Assets & Brand Loyalty Moat
American Express leverages strong brand loyalty and premium customer relationships. Yet, its declining ROIC below WACC signals weakening capital efficiency. Expansion into travel and lifestyle services may deepen the moat but faces rising fintech disruption in 2026.
PayPal Holdings, Inc.: Network Effects & Scalability Moat
PayPal’s competitive edge stems from robust network effects and technological scale, outperforming AXP with rising ROIC comfortably above WACC. Its growing global digital payments footprint offers significant upside amid evolving e-commerce trends.
Brand Loyalty vs. Network Effects: Which Moat Holds Stronger?
PayPal’s expanding network effects create a wider, more sustainable moat than American Express’s eroding brand-based advantage. I see PayPal better positioned to defend and grow its market share in 2026.
Which stock offers better returns?
American Express Company’s stock surged strongly over the past year, with notable highs and a slowing upward momentum. PayPal Holdings, Inc. declined sharply, reflecting persistent selling pressure.
Trend Comparison
American Express Company’s stock gained 64.4% over the past 12 months, displaying a bullish trend with decelerating growth and high volatility. Its price ranged from 218.2 to 382.56.
PayPal Holdings, Inc.’s stock dropped 35.69% over the same period, marking a bearish trend with decelerating decline and moderate volatility. Its price moved between 40.42 and 91.81.
American Express outperformed PayPal, delivering the highest market returns and maintaining buyer dominance despite recent volume decreases.
Target Prices
Analysts present a mixed but generally optimistic target price consensus for American Express and PayPal.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| American Express Company | 295 | 425 | 375.17 |
| PayPal Holdings, Inc. | 34 | 87 | 53.95 |
American Express’s consensus target sits modestly above its current price of 359.15, signaling moderate upside potential. PayPal’s consensus target price, at 53.95, suggests significant upside versus its current 40.42, reflecting greater bullishness among analysts.
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How do institutions grade them?
The following tables summarize the latest institutional grades for American Express Company and PayPal Holdings, Inc.:
American Express Company Grades
This table shows recent grades assigned to American Express by leading financial institutions.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Truist Securities | Maintain | Buy | 2026-02-02 |
| JP Morgan | Maintain | Neutral | 2026-02-02 |
| BTIG | Maintain | Sell | 2026-02-02 |
| JP Morgan | Maintain | Neutral | 2026-01-12 |
| TD Cowen | Maintain | Hold | 2026-01-08 |
| Barclays | Maintain | Equal Weight | 2026-01-06 |
| Truist Securities | Maintain | Buy | 2025-12-22 |
| Wells Fargo | Maintain | Overweight | 2025-12-17 |
| Freedom Capital Markets | Upgrade | Hold | 2025-10-24 |
| Wells Fargo | Maintain | Overweight | 2025-10-20 |
PayPal Holdings, Inc. Grades
This table displays the most recent grades issued for PayPal by recognized grading firms.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | Maintain | Neutral | 2026-02-04 |
| Evercore ISI Group | Maintain | In Line | 2026-02-04 |
| Canaccord Genuity | Downgrade | Hold | 2026-02-04 |
| Macquarie | Maintain | Outperform | 2026-02-04 |
| Citizens | Downgrade | Market Perform | 2026-02-04 |
| Needham | Maintain | Hold | 2026-02-04 |
| Wells Fargo | Maintain | Equal Weight | 2026-02-04 |
| Citigroup | Maintain | Neutral | 2026-02-04 |
| Goldman Sachs | Maintain | Sell | 2026-02-04 |
| Morgan Stanley | Maintain | Underweight | 2026-02-04 |
Which company has the best grades?
American Express consistently receives stronger grades, including “Buy” and “Overweight” from several top firms. PayPal’s ratings lean more toward neutral and hold, with some downgrades. This suggests greater institutional confidence in American Express’s near-term prospects.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
American Express Company
- Faces intense competition in traditional credit services and travel sectors.
PayPal Holdings, Inc.
- Competes aggressively in digital payments and technology innovation space.
2. Capital Structure & Debt
American Express Company
- High debt-to-equity ratio (1.73) signals elevated financial leverage risk.
PayPal Holdings, Inc.
- Maintains a healthier debt profile with a lower debt-to-equity ratio (0.49).
3. Stock Volatility
American Express Company
- Moderate beta of 1.13 suggests average sensitivity to market swings.
PayPal Holdings, Inc.
- Higher beta of 1.42 indicates greater stock price volatility and market risk.
4. Regulatory & Legal
American Express Company
- Subject to stringent financial regulations impacting credit services.
PayPal Holdings, Inc.
- Faces evolving regulatory scrutiny around digital payments and data privacy.
5. Supply Chain & Operations
American Express Company
- Relies on established merchant networks and payment processing systems.
PayPal Holdings, Inc.
- Depends on digital infrastructure stability and partnerships with tech vendors.
6. ESG & Climate Transition
American Express Company
- Increasing pressure to align with sustainable finance initiatives.
PayPal Holdings, Inc.
- Must address data security and ethical fintech practices amid ESG trends.
7. Geopolitical Exposure
American Express Company
- Global consumer base exposes it to currency and regional economic risks.
PayPal Holdings, Inc.
- Operates in 200 markets, vulnerable to geopolitical tensions affecting cross-border payments.
Which company shows a better risk-adjusted profile?
PayPal’s stronger capital structure and favorable financial ratios underpin a more robust risk-adjusted profile. American Express struggles with high leverage and a distressed Altman Z-score, raising bankruptcy concerns. PayPal’s grey zone Z-score and solid Piotroski score reflect better financial health. The stark contrast in debt-to-equity ratios and Altman Z-scores confirms PayPal’s superior resilience to market and credit risks.
Final Verdict: Which stock to choose?
American Express Company’s superpower lies in its robust brand and strong net margin, making it a consistent cash generator. However, its declining ROIC and stretched balance sheet call for caution. It suits portfolios aiming for aggressive growth with a tolerance for operational and capital allocation risks.
PayPal Holdings, Inc. benefits from a durable strategic moat rooted in scalable digital payment infrastructure and solid recurring revenue streams. Its financial profile is more stable and efficient than American Express, appealing to investors favoring GARP (Growth at a Reasonable Price) strategies.
If you prioritize aggressive growth and can withstand value erosion risks, American Express offers compelling upside due to its brand strength and cash flow potential. However, if you seek better stability and a sustainable competitive advantage, PayPal outshines with its efficient capital use and favorable valuation metrics.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of American Express Company and PayPal Holdings, Inc. to enhance your investment decisions:
