We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Time to Buy Visa or Mastercard's Stock After Earnings?
Read MoreHide Full Article
Following Mastercard’s (MA - Free Report) Q2 report on Wednesday, we now have the most recent financial insight into the major credit card companies with Visa (V - Free Report) reporting its quarterly results last week.
Let’s see how these payment service leaders are faring in the current economic environment and if it's time to buy Visa or Mastercard stock.
Visa’s Q3 Results
Last Tuesday, Visa reported results for what was its fiscal third quarter stating its key business drivers were relatively stable as payments volume increased by 7% with cross-border volume spiking 14%. Total processed transactions and revenue rose 10% respectively with Q3 sales at $8.9 billion compared to $8.12 billion in the comparative quarter. This slightly missed Q3 sales estimates of $8.91 billion.
Visa was able to exceed bottom line expectations with Q3 EPS expanding 12% year over year to $2.42 and topping estimates of $2.41 per share. Notably, Visa has surpassed earnings expectations for 18 consecutive quarters posting an average EPS surprise of 2.9% in its last four quarterly reports.
Image Source: Zacks Investment Research
Mastercard's Q2 Results
Like Visa, Mastercard saw a sharp increase in cross-border volume growth last quarter which rose 17%. Mastercard attributed stronger consumer spending to a solid labor market and wage growth. Standing out in particular was valued added services and solutions net revenue which climbed 19%.
Overall, Mastercard’s Q2 sales rose 10% to $6.96 billion which edged estimates of $6.84 billion. Earnings of $3.59 per share came in 2% better than expected and soared 24% from EPS of $2.89 in Q2 2023. Mastercard has surpassed earnings expectations for 15 consecutive quarters posting an average EPS surprise of 3.49% in its last four quarterly reports.
Image Source: Zacks Investment Research
Growth Comparison
Based on Zacks estimates, Visa’s total sales are now expected to expand 9% in fiscal 2024 with its top line projected to grow another 10% in FY25 to $39.32 billion. Even better, annual earnings are expected to rise 13% this year and are projected to increase another 12% in FY25 to $11.08 per share.
Image Source: Zacks Investment Research
Turning to Mastercard, total sales are projected to increase 11% in FY24 and are expected to expand 12% in FY25 to $31.23 billion. More impressive, 16% EPS growth is now expected this year with Mastercard’s annual earnings forecasted to jump another 15% in FY25 to $16.48 per share.
Image Source: Zacks Investment Research
Valuation Comparison (P/E)
At current levels, Visa's stock trades at 26.8X forward earnings which is beneath Mastercard's 32.5X although both are at premiums to the S&P 500’s 23.3X.
Image Source: Zacks Investment Research
Recent Price Performance
Year to date, Visa’s stock is only up +1% while Mastercard shares are virtually flat. However, Visa is still sitting on +12% gains over the last year with Mastercard up +18% but both have trailed the S&P 500’s +23%.
Image Source: Zacks Investment Research
Takeaway
Visa and Mastercard’s stock both land a Zacks Rank #3 (Hold). While the YTD price performance of these credit card giants has been subpar their growth trajectories are very attractive which should support long-term investors. Following their quarterly reports more short-term upside will mostly likely depend on the trend of earnings estimate revisions in the coming weeks.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Time to Buy Visa or Mastercard's Stock After Earnings?
Following Mastercard’s (MA - Free Report) Q2 report on Wednesday, we now have the most recent financial insight into the major credit card companies with Visa (V - Free Report) reporting its quarterly results last week.
Let’s see how these payment service leaders are faring in the current economic environment and if it's time to buy Visa or Mastercard stock.
Visa’s Q3 Results
Last Tuesday, Visa reported results for what was its fiscal third quarter stating its key business drivers were relatively stable as payments volume increased by 7% with cross-border volume spiking 14%. Total processed transactions and revenue rose 10% respectively with Q3 sales at $8.9 billion compared to $8.12 billion in the comparative quarter. This slightly missed Q3 sales estimates of $8.91 billion.
Visa was able to exceed bottom line expectations with Q3 EPS expanding 12% year over year to $2.42 and topping estimates of $2.41 per share. Notably, Visa has surpassed earnings expectations for 18 consecutive quarters posting an average EPS surprise of 2.9% in its last four quarterly reports.
Image Source: Zacks Investment Research
Mastercard's Q2 Results
Like Visa, Mastercard saw a sharp increase in cross-border volume growth last quarter which rose 17%. Mastercard attributed stronger consumer spending to a solid labor market and wage growth. Standing out in particular was valued added services and solutions net revenue which climbed 19%.
Overall, Mastercard’s Q2 sales rose 10% to $6.96 billion which edged estimates of $6.84 billion. Earnings of $3.59 per share came in 2% better than expected and soared 24% from EPS of $2.89 in Q2 2023. Mastercard has surpassed earnings expectations for 15 consecutive quarters posting an average EPS surprise of 3.49% in its last four quarterly reports.
Image Source: Zacks Investment Research
Growth Comparison
Based on Zacks estimates, Visa’s total sales are now expected to expand 9% in fiscal 2024 with its top line projected to grow another 10% in FY25 to $39.32 billion. Even better, annual earnings are expected to rise 13% this year and are projected to increase another 12% in FY25 to $11.08 per share.
Image Source: Zacks Investment Research
Turning to Mastercard, total sales are projected to increase 11% in FY24 and are expected to expand 12% in FY25 to $31.23 billion. More impressive, 16% EPS growth is now expected this year with Mastercard’s annual earnings forecasted to jump another 15% in FY25 to $16.48 per share.
Image Source: Zacks Investment Research
Valuation Comparison (P/E)
At current levels, Visa's stock trades at 26.8X forward earnings which is beneath Mastercard's 32.5X although both are at premiums to the S&P 500’s 23.3X.
Image Source: Zacks Investment Research
Recent Price Performance
Year to date, Visa’s stock is only up +1% while Mastercard shares are virtually flat. However, Visa is still sitting on +12% gains over the last year with Mastercard up +18% but both have trailed the S&P 500’s +23%.
Image Source: Zacks Investment Research
Takeaway
Visa and Mastercard’s stock both land a Zacks Rank #3 (Hold). While the YTD price performance of these credit card giants has been subpar their growth trajectories are very attractive which should support long-term investors. Following their quarterly reports more short-term upside will mostly likely depend on the trend of earnings estimate revisions in the coming weeks.