Banking, finance, and taxes

Will Visa Beat MasterCard and Amex Earnings?

Chris Lange

Published: January 31, 2017 10:35 am

Last Updated: January 12, 2020 3:19 pm

Mastercard Inc. (NYSE: MA) and Visa Inc. (NYSE: V) have been fighting for year for control in the financial services sector as two of the biggest credit card distributors. Mastercard came out with its fourth-quarter earnings on Tuesday morning, and they did not live up to expectations, but Visa is set to report later this week and could trump Mastercard’s earnings.

Earlier this month, American Express Co. (NYSE: AXP) reported earnings as well. This company is still undergoing difficulties with its Costco separation and seeing less-than-favorable comparable sales, so its results are not exactly up to par with what we are expecting from Visa and Mastercard.

The fact that Mastercard and Amex earnings have not lived up to expectations might be foreboding for Visa. 24/7 Wall St. has included some highlights from the Mastercard and Amex earnings reports, as well as what to expect from Visa on Thursday.

Mastercard posted $0.86 in earnings per share (EPS) and $2.76 in revenue, versus consensus estimates from Thomson Reuters that called for $0.85 in EPS and revenue of $2.79 billion. The same period of last year reportedly had EPS of $0.79 and $2.52 billion in revenue.

A few of the highlights from the report included:

• An increase in switched transactions3 of 17%, to 15.2 billion;
• A 9% increase in gross dollar volume, on a local currency basis and adjusting for the impact of recent EU regulatory changes, to $1.2 trillion; and
• An increase in cross-border volumes of 13%.

However, it is worth noting that these highlights were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.

Shares of Mastercard were trading down 2.8% at $106.30 on Tuesday, with a consensus analyst price target of $120.37 and a 52-week trading range of $78.52 to $111.07.

For its fourth quarter, Amex posted EPS of $0.88 on revenues of $8.02 billion. In the same period a year ago, Amex posted EPS of $0.89 on revenues of $8.39 billion. Consensus estimates called for EPS of $0.98 and revenues of $8.09 billion.

Excluding the impacts of the lost Costco business and unfavorable foreign exchange rates, adjusted quarterly revenues rose 6% and adjusted yearly revenues rose 5%.

Amex shares were last seen down nearly 1% at $76.61, with a 52-week range of $50.27 to $78.02 and a consensus price target of $80.56.

Separately, analysts are saying that Visa will have $0.78 in EPS and $4.29 billion in revenue, compared with the EPS of $0.69 and $3.56 billion in revenue in the same period of last year.

Visa was recently trading down nearly 1% to $82.95. The consensus price target is $95.45, and the 52-week range is $66.12 to $84.27.