Mastercard (MA) beat third-quarter earnings estimates early Thursday, after rival payments giant Visa (V) topped fiscal fourth-quarter earnings Tuesday night, but forecast slower-than-expected 2022 revenue growth. Visa stock and Mastercard stock fell modestly Thursday after tumbling Wednesday.
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Mastercard Earnings
Estimates: Analysts expected Mastercard earnings per share of $2.19, 37% higher than a year ago. Sales were seen coming in at $4.95 billion, a 29% year-over year increase.
Results: Mastercard earnings per share rose to $2.37 a share, with revenue climbing 30% to $5 billion.
CEO Michael Miebach said in a statement that Mastercard’s performance was driven by „healthy domestic spending and solid growth in cross-border spending which has recently returned to pre-pandemic levels.“
„We are extending the scale and power of our trusted network through innovations like our new Mastercard Installments program,“ he added. „And we continue to add to our efforts in cryptocurrency services and open banking through the acquisition of CipherTrace and the planned acquisition of Aiia.“
Gross dollar volume grew 20%, on a local currency basis, to $2 trillion. Cross-border volume swelled 52% on a local currency basis. And switched transactions (authorization, clearing and settlement) gained 25%.
Last month, Mastercard announced it too was launching a BNPL program in the U.S. Dubbed Mastercard Installments, it’s slated to be rolled out to other markets in the future.
Mastercard stock edged down 0.5% to 334.07, reversing lower from modest gains on the stock market today. Shares had been up 3% in premarket trading. Mastercard stock retreated just over 6% Wednesday. Its relative strength line is slumping. Mastercard’s RS Rating is just 23, while its EPS Rating is 79.
Visa Earnings
Estimates: FactSet analysts expected Visa earnings of $1.55 a share for fiscal Q4, 38% above the year-earlier quarter. Full-year EPS was seen rising 15% to $5.81.
Revenue for the quarter was seen growing 28% year over year to $6.52 billion, to cap the year with $24.06 billion, a 10% annual gain.
Results: Visa reported earnings of $1.62 per share, a 45% jump from the year-ago quarter, on sales of $6.6 billion, a 29% increase. EPS was $5.91 for the year, while revenue rose 10% to $24.1 billion.
„Our performance was driven by the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services,“ said Visa CEO Alfred Kelly. „Looking ahead, Visa is even better positioned for the future as cross-border travel recovers and we continue to drive the rapid growth of digital payments and enable innovation in money movement globally.“
Payments volume grew 17% for the quarter and 16% for all of 2021. Cross-border volume surged 38% in Q4 and 9% for the year. Processed transactions increased 21% for the quarter and 17% for the full year.
Outlook: Visa sees 2022 revenue growth at the „high end of the mid-teens.“ Analysts had targeted 20% growth.
In July, the Dow Jones giant ventured into the buy-now-pay-later domain, following in the footsteps of PayPal (PYPL) and several others. The program is called Visa Installments Solution. But unlike PayPal and other BNPL providers, which screen consumers for credit worthiness, Visa will not perform risk assessment on whether to extend installment loans for credit card issuers.
Visa also dipped its toe in NFTs. In August, it bought a CyberPunk, a non-fungible token of a digital artwork, for about $150,000 in Ethereum.
Visa Stock
Visa stock fell 1.4% to 212.73. On Wednesday, Visa stock tumbled 6.9%. Shares are in a flat base with a buy point of 252.77, according to MarketSmith, but undercut the low of the base and hit a six-month low.
Visa’s relative strength line is trending lower. Its RS Rating is 32 out of a possible 99, while its EPS Rating is 88.
Among other payments stocks Square (SQ) sank 3.9% Wednesday. Square is getting into the BNPL market via a pending $29 billion acquisition of AfterPay.
PayPal stock slumped 3.2% on Wednesday. PayPal rose modestly Monday after saying it wouldn’t buy Pinterest (PINS). PYPL stock tumbled 10% last week on PINS takeover buzz.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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