big credit card company MasterCard (horse) and visa (5) Announce financial report on Thursday. Mastercard reports fourth-quarter results before the market opens. After the close, Visa announced its fiscal 2023 results. MA stock fell Thursday following its report. Visa stock rose slightly ahead of the afternoon announcement.
The backdrop of rising interest rates could work in favor of the big credit card processors. But those rates also squeeze consumers, who are also increasingly concerned about a possible recession. These factors are expected to make consumer finance companies’ fundamentals challenging for much of 2023, Wells Fargo analyst Donald Fandetti wrote in a mid-December research note.
However, alleviating travel-related concerns and revenue beyond consumer credit cards is improving the company’s diversification. Additionally, KeyBanc analyst Josh Beck noted on Jan. 9 that additional payment traffic beyond consumer cards should amplify Visa and Mastercard’s growth.
MA stock and Visa stock traded sharply higher and lower Tuesday as trading on the NYSE malfunctioned. Both hit the “circuit breaker” and stop momentarily. So far this week, MA stock closed up 1.6% on Wednesday, while V stock edged up 0.3% at the time.
Through the first three quarters of 2022, Mastercard’s total dollar volume grew 14% to $6 trillion. The company’s cross-border transaction volume soared 51% during the year, generating $4.8 billion in cross-border fees.
In the fourth quarter, Mastercard’s adjusted earnings rose 13% to $2.65 a share on revenue up 12% to $5.8 billion. That beat Wall Street expectations for a 9.4 percent rise in earnings to $2.57 a share and a 10.9 percent rise in revenue to $5.79 billion.
The results mark seven consecutive quarters of earnings growth and eight quarters of revenue growth. However, earnings growth has slowed over the past four quarters. Sales growth has slowed over the past seven quarters, down from a 36% growth rate in the second quarter of 2021.
After rising 1.2% on Wednesday, MA shares fell more than 1% in pre-market trading on Thursday. Mastercard stock has soared 20% over the past three months and 10.5% over the past year. Shares are climbing to new all-time highs since last February.
Visa stock, earnings results
In the fourth quarter, Visa’s payment volume grew 10% year-over-year, and the number of transactions processed rose 12%. The company’s cross-border transaction volume jumped 36% as revenue from international transactions soared 52% to $2.87 billion.
Earnings and revenue for the first quarter of Visa’s 2023 fiscal year are expected to grow for the seventh consecutive quarter, according to a Thursday afternoon report. Earnings per share are expected to rise 11% to $2.01 on revenue up 9% to $7.7 billion.
In mid-December, Visa announced a commitment to invest $1 billion in Africa over the next five years to scale its operations and deepen ties with governments, financial institutions, merchants and other strategic partners. Visa said the investment will help create more inclusive economies across the continent and make digital payments more accessible.
Visa shares edged up less than 1% on Wednesday ahead of the earnings report. V stock is up 10% over 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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