Visa and MasterCard Earnings Tell a Tale of a Better Consumer

Visa

Visa reported its fiscal fourth-quarter results Wednesday after the market closed as $2.18 in earnings per share (EPS) and $3.23 in revenue. That was against Thomson Reuters consensus estimates of $2.10 EPS and $3.19 billion in revenue. In the fourth quarter of the previous year, Visa posted $1.85 in EPS and $2.97 billion in revenue.

For the 2014 full year, Visa reported $9.07 EPS and $12.7 billion in revenue, versus consensus estimates of $8.99 EPS and $12.67 billion in revenue. That was up from $7.59 in earnings per share and $11.78 billion in revenue in fiscal 2013.

The company gave guidance for the 2015 fiscal year as “constant dollar revenue growth of low double digits with an expectation of two percentage points of negative foreign currency impact.” Visa also expects an annual operating margin in the mid-60s and common stock EPS growth in the mid-teens.

ALSO READ: 5 Stocks That Will See Huge Buying Friday on Russell 2000 Rebalance

Net income for the fourth quarter was $1.4 billion, or 14% above the same quarter in the previous year. Net income for the full year was $5.7 billion, an increase of 15% over the 2013 fiscal year.

Visa’s segments recorded revenues for the fourth quarter of:

• $1.499 billion from Service
• $1.348 billion from Data Processing
• $938 million from International Transaction
• $212 million from Other
• -$768 million from Client

Oppenheimer maintained an Outperform rating for Visa, but lowered its price target to $250 from $270, on October 24.

Shares of Visa closed Wednesday up 1% at $214.45. Following the release of the earnings report, the initial response in the post market was positive and shares were up over 4% at $223.80. They were trading hands $232.16 Thursday morning.

The consensus analyst price target is $249.16 and the 52-week trading range is $194.26 to $235.50. Visa has a market cap of $134 billion.

MasterCard

MasterCard reported its third-quarter results Thursday before the market open as $0.87 in EPS and $2.5 billion in revenue. The Thomson Reuters consensus estimates were EPS of $0.78 on revenue of $2.45 billion in revenue. In the same quarter of the previous year, MasterCard reported EPS of $0.73 and $2.22 billion in revenue.

Net income for the third quarter was $1.0 billion, up from $879 million in the same period in the previous.

The earnings across MasterCard’s global segments:

• Asia Pacific, Middle East, Africa, $340 million
• Canada, $34 million
• Europe, $353 million
• Latin America, $91 million
• United States, $339 million

Oppenheimer maintained an Outperform rating for MasterCard, but lowered the price target to $85 from $90, on October 24.

Shares closed Wednesday down less than 1% at $75.99. Following the release of the earnings report, the initial response in the premarket was positive, and shares were up over 6% to $80.84 in morning trading.

The stock has a consensus analyst price target of $88.67 and a 52-week trading range of $68.68 to $84.75. The company has a market cap of $88 billion.

ALSO READ: Top Health Care Stocks to Buy That Have Already Posted Earnings

American Express

Looking back at American Express, it reported its third-quarter earnings earlier in October as $1.40 per share and $8.33 billion in revenue. The company beat estimates on the bottom line but missed on the top line.

American Express’s segments reported:

• U.S. Card Services reported a 14% increase in net income to $889 million from last year.
• International Card Services net income remained unchanged from the previous year at $142 million.
• Global Commercial Services reported a fall in net income of 22% to $204 million from 2013.
• Global Network & Merchant Services reported a 9% increase in net income to $427 million.