big credit card company master Card (MA) and visa (V) Report financial results on Thursday. Mastercard beats expectations with fourth quarter results before the market opens. And Visa kicked off fiscal year 2023, beating expectations in the afternoon report. MA’s shares fell on Thursday, while Visa’s shares rose hours after the announcement.
The rising interest rate backdrop could be positive for the big credit card processors. But those rates are also putting pressure on consumers, who have become increasingly wary of the possibility of a recession. These factors will make 2023 a challenging environment for consumer finance company fundamentals, Wells Fargo analyst Donald Fundetti wrote in a mid-December research note.
However, the easing of travel-related concerns and non-consumer credit card revenues is driving diversification. Additional payment flows beyond consumer cards should also boost growth for Visa and Mastercard, KeyBanc analyst Josh Beck noted on Jan. 9.
MA and Visa stocks jumped sharply on Tuesday as the New York Stock Exchange traded poorly. Both hit a “circuit breaker” and stopped briefly. His MA shares on Wednesday are up 1.6% so far this week, while V shares are up 0.3% in the meantime.
Mastercard’s total dollar appreciation increased 14% to $6 trillion by the first three quarters of 2022. The company’s cross-border transaction volume surged 51% over the year, generating $4.8 billion in cross-border fees.
Mastercard’s adjusted earnings increased 13% to $2.65 per share in the fourth quarter and revenue increased 12% to $5.8 billion. That topped Wall Street’s expectations of $5.79 billion on 10.9% earnings growth and $2.57 a share on 9.4% earnings growth.
Total dollar strength increased 8% to $2.1 trillion in the fourth quarter. Cross-border payments were $1.8 billion, up 31%, and transaction processing fees increased 12% to $3.3 billion.
This result marks the seventh consecutive quarter of revenue growth and the eighth consecutive quarter of revenue growth. However, revenue growth has slowed in the last four quarters. Sales growth has also slowed over the last seven quarters, down from his 36% growth in Q2 2021.
MA shares fell 1.5% on Thursday after the results were released. Shares rose 1.2% on Wednesday. Mastercard stock has soared 20% over the past three months and is up 10.5% over the past year. Shares are heading towards their highest level since February last year.
Visa Stocks, Financial Results
In the fourth quarter, Visa’s payment volume increased 10% year-over-year, and the number of transactions processed increased 12%. The company’s cross-border trading volume jumped 36% as international trading revenue rose 52% to $2.87 billion.
Visa’s first-quarter fiscal 2023 earnings and earnings increased for the seventh straight quarter in a Thursday afternoon report. Adjusted earnings increased 12% to $7.9 billion and 21% to $2.18 per share. Wall Street forecast earnings to grow 9% to $7.7 billion and 11% to $2.01 per share.
Total payments increased 7% year-on-year, and the company’s cross-border transaction volume increased 22% in the first quarter. Services revenue increased 10% to $3.5 billion and data processing revenue increased 6% to $3.8 billion. International trading revenue increased 29% to $2.8 billion.
In mid-December, Visa announced a pledge to invest $1 billion in Africa over the next five years to grow its business and deepen relationships with governments, financial institutions, merchants and other strategic partners. Visa says the investment will help create a more inclusive economy across the continent and enable greater access to digital payments.
Visa’s share price jumped 1.5% in the hours following the report and fell slightly ahead of Thursday’s results. V stock is up 10% for him in the last three months and 9% for him last year.
Follow Harrison Miller on Twitter for news and stock updates. @IBD_ Harrison.
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