Big credit card companies MasterCard (MA) and Visa (V) Report earnings results on Thursday. MasterCard will announce its fourth-quarter results before the market opens. Visa will begin its fiscal 2023 results after the closing bell. MA stock fell Thursday following the report. Visa stock rose shortly after the announcement.
A backdrop of rising interest rates could be positive for large credit card processors. But those interest rates are weighing on consumers, who are wary of a possible recession. Wells Fargo analyst Donald Fandetti expects these conditions to make most of 2023 a challenging environment for consumer finance company fundamentals, wrote in a mid-December research note.
But reducing travel-related risks and revenue outside of consumer credit cards is improving the company’s differentiation. Also, additional payment flows outside of consumer cards should extend Visa and MasterCard’s growth, KeyBanc analyst Josh Beck noted on Jan. 9.
On Tuesday, MA stock and Visa shares went up and down sharply amid a trading crash on the New York Stock Exchange. Both hit the “circuit breakers” and stopped momentarily. MA stock ended the week up 1.6% on Wednesday, while V stock rose 0.3% over that period.
MasterCard’s total dollar volume grew 14 percent in the first three quarters of 2022, to $6 trillion. The company’s cross-border volume rose 51 percent year over year, generating $4.8 billion in cross-border payments.
For the fourth quarter, MasterCard’s adjusted earnings per share rose 13 percent to $2.65 to $5.8 billion on 12 percent revenue growth. That just beat 9.4% revenue growth to $2.57 billion, beating Wall Street expectations for 10.9% revenue growth to $5.79 billion.
For Q4, total dollar volume grew 8 percent to $2.1 trillion. Cross-border payments rose 31% to $1.8 billion and transaction processing fees rose 12% to $3.3 billion.
The results represent seven consecutive quarters of revenue growth and eight consecutive quarters of revenue growth. However, earnings gains have slowed over the past four quarters. And sales growth has slowed over the past seven quarters, falling from 36% growth in Q2 2021.
MA stock was down more than 1% in premarket trading on Thursday after rising 1.2% on Wednesday. Mastercard’s stock is up 20% over the past three months and is up 10.5% over the past year. Stocks are rising to their highest levels since last February.
Visa collection, revenue effects
For the fourth quarter, Visa processing volume increased 10 percent year over year and the number of transactions processed increased 12 percent. Global trading revenue grew 52 percent to $2.87 billion, with the company’s cross-border volume up 36 percent.
Visa’s first-quarter fiscal 2023 revenue and earnings are expected to increase for the seventh straight quarter in a report Thursday afternoon. Earnings rose 11 percent to $2.01 to $7.7 billion on revenue growth of 9 percent.
In mid-December, Visa announced a commitment to invest $1 billion in Africa over the next five years to grow its operations and strengthen relationships with governments, financial institutions, businesses and other strategic partners. Visa said the investment will help create an inclusive economy on the continent and make digital payments more accessible.
Visa stock rose less than 1 percent ahead of earnings on Wednesday. V stock is up 10% in the past three months and 9% over the past year.
You can follow Harrison Miller on Twitter for more news and stock updates. @IBD_Harrison.
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