Mastercard Tops Views After Visa Earnings Beat; Both See Incentives Rise

Mastercard (MA) beat second-quarter earnings forecasts early Thursday after rival Visa (V) topped fiscal third-quarter estimates late Tuesday. Mastercard stock and Visa stock rose.


The results come after American Express (AXP) last week crushed Q2 earnings estimates, as payment volumes in the U.S. pick up amid an economic recovery.

Mastercard Earnings

Estimates: Analysts see EPS rising 28% to $1.74 year over year. Revenue is expected to increase 31% to $4.37 billion, according to FactSet.

Results: EPS of $1.98 on revenue of $4.5 billion. Gross dollar volume increased 33%, on a local currency basis, to $1.9 trillion. Cross-border volume jumped 58%. Switched transactions grew 41%.

Rebates and incentives surged 53%, or 49% on a currency-neutral basis, due to growth in transactions and new and renewed deals.

Stock: Mastercard stock rose 1.7% to 390.00 in premarket trading on the stock market today. MA stock is nearing a 401.60 buy point from a cup base. Its relative strength line is ticking up. Mastercard’s RS Rating is 60 and its EPS Rating is 65.

Mastercard announced Tuesday a new Start Path global startup engagement program dedicated to supporting fast-growing digital assets, blockchain and cryptocurrency companies.

Seven startups have joined the program, including Singapore-based Mintable, a non-fungible token (NFT) marketplace where users can create, buy and sell digital and physical assets backed by the blockchain, such as digital collectibles, avant-garde artwork and music.

Visa Earnings, Visa Stock

Estimates: FactSet consensus is for EPS to grow 26% from the year-ago quarter to $1.34. Sales are seen climbing 26% to $5.86 billion.

Results: EPS of $1.49 on sales of $6.13 billion. Service revenues increased 17% to $2.8 billion. Data processing revenues rose 32% to $3.3 billion. International transaction revenues grew 54% to $1.7 billion. Client incentives rose to $2.1 billion from $1.5 billion a year ago and $2 billion in the prior quarter.

Payments volume increased 34% on a constant-dollar basis, accelerating from the prior quarter’s 11% growth. Cross-border volume excluding transactions within Europe jumped 53%. Total processed transactions climbed 39% to 42.6 billion, led by domestic transactions.

In a statement, CEO Alfred Kelly attributed the gains to key economies in a “reopening-driven recovery.”

“This was best demonstrated by credit and face-to-face spending bouncing back while debit and eCommerce volumes remained robust from accelerated cash digitization sparked by the pandemic. Additionally, crossborder travel spending improved as vaccination rates rose and more borders opened,” he said.

On July 13, Visa announced it was teaming up with payment processor Global Payments (GPN) and Desjardins, North America’s leading financial cooperative group, to bring Visa Installments to participating Canadian merchants and eligible credit card holders. Visa stock rose on the announcement.

Visa Installments is a new option to convert qualifying purchases into smaller, equal payments made over a defined period of time using an eligible credit card. Canadian merchants will be among the first globally to enjoy the benefits of Visa Installments.

On July 6, Visa teamed up with financial tech company BlockFi to launch a 2% Bitcoin rewards credit card to U.S.-based residents.

Stock: Visa stock rose 0.4% to 248.00 early Thursday. Shares are just about 5% above its 237.60 buy point from a flat base, which makes the stock extended, according to MarketSmith chart analysis. Visa’s relative strength line is trending upward. Its RS Rating is 71 out of a possible 99, while its EPS Rating is 68.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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