Credit Card Company Weekly Notes – MasterCard, Visa And American Express

Credit card company stocks – American Express (NYSE:AXP), MasterCard (NYSE:MA) and Visa (NYSE:V) – were all down by nearly 2% or more this week. There were a number of developments for Visa and MasterCard in terms of innovating their product lines as well as exploring newer vistas in the payment industry. American Express shared insights into consumer spending in the U.S. with the release of the American Express Spending and Saving Tracker report. ^[1]

Below we review the week ending September 26, 2014 for the three credit card companies.

American Express

AmEx released its Spending and Saving Tracker report, which profiles  consumer spending and saving behavioral patterns in the U.S. The survey included around 1,500 respondents from the general population as well as more affluent groups (minimum household income of $100,000). Some key statistics from the report highlight an improvement in consumer spending in the U.S. Around 80% of people surveyed reported stability in jobs and nearly 50% expect better financial stability in the coming months. This has led to higher spending on items such as fashion accessories and leisure activities. On the savings front, trends indicate a substantial decrease in savings over the previous year.  ((American Express Spending and Saving Tracker))

AmEx’s stock was down 2% through Thursday before largely recovering on Friday. The closing price of $88 put the company’s current market cap at around $93 billion, compared to our valuation of $109 billion. We have a price estimate of $104 for the company’s stock.

See our complete analysis of AmEx’s stock here

MasterCard

MasterCard hosted the Innovation Forum in Singapore on September 24 and 25.The forum was organized to discuss and share innovations in the payment industry between merchants, partners and customers. A host of areas such as mobile payments, use of data, payment security, financial inclusion and digital convergence were discussed at the forum. ^[2] MasterCard also launched a digital platform called Priceless Engine. The platform will enable MasterCard’s bank partners to benefit from the company’s analytic strengths in understanding consumer behavior patterns, tracking of engagement as well as real-time data analysis. ^[3]

MasterCard’s stock tumbled by nearly 3% and closed at about $75 at the end of the week, translating into a market cap of about $87 billion. We have a price estimate of $85 for the company’s stock, valuing the company at over $95 billion. We estimate an EPS of $3 for the current calendar year, which is similar to the consensus EPS for the company.

See our full analysis of MasterCard here

Visa

In its pursuit to expand and further increase its technological prowess, Visa announced that it will be setting up a new technology center in India in 2015. Additionally the company will create 2,000 full-time technological positions. With these steps, the company plans to expedite the transition to electronic payments and also improve the infrastructure for digital and mobile payment solutions. The company also aims to strengthen its in-house technological capabilities. ^[4]

Visa’s stock dropped by just under 2% last week. Closing the week at $212, Visa has a market cap of around $133 billion. We have a price estimate of $217 for Visa’s stock, valuing the company at $166 billion.

See our full analysis of Visa here

1. American Express Press Release [↩]
2. Innovation Forum: Future of Payments Unveiled in Singapore, MasterCard Press Release [↩]
3. MasterCard launches “Priceless Engine”, MasterCard Press Release [↩]
4. Visa Accelerates Technology Strategy with Global Recruitment Plan and New Technology Center, Visa Press Release [↩]