Mastercard, Visa: Q1 Earnings May Be Fine, But Guidance Will Be Weak 62 comments
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Mastercard (MA) and Visa (V) are slated to report earnings April 29th and 28th, respectively. Both are in their quiet periods, and no news beforehand is considered good news. There were no warnings because both will have better than expected first quarter numbers, but what will the future look like? Now that the both Bernanke and Greenspan have finally acknowledged that we are in a recession (it must be true), this has to affect guidance. After all, how long can we use the "shift to essentials" (gas and groceries) arguement?
Shareholders and analysts seem to be in denial...I can't find a negative word anywhere, but the fact is that consumers swipe more in good times when confidence is high. There is the international component, but even the IMF has been trending down their growth expectations. Retail sales have stalled, late payments on credit card debt are increasing rapidly, demand for gasoline is at a 3 year low, and consumers are getting fed up with high fees.
Both Mastercard and Visa trade at lofty P/E levels which are unsustainable if growth rates are tweaked lower. The fact is, the past is not an indication of future stock performance. It's just a matter of time before the momentum players run for the hills.
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This article has 62 comments:
In terms of number of outstanding shares. there are many other companies out there that have way more outstanding shares and are thriving....
I appreciate the criticism b/c we need to hear the downside as well as the upside to any stocks. I own stock in visa and probably have a vested interest in it.
I tend to like Sharebuilder as it gives you a ton of options, low cost, etc...I would recommend you use Yahoo! finance for research, as its the best free web on the net for finance.
I consider a strong long term pick for any long term investor. The price may go back down a tad, but for long term, I would just get in. If you're nervous, wait for the earnings to come to see who's right and who's wrong. Either way, the long term trends globally are away from cash and towards plastic, whether that's debit or credit.
This will only accelerate and the world's #1 player is Visa. As long as this industry keeps increasing revenue and there's no reason to think that long term it won't, both MA and Visa are good busy. I prefer the market leader in Visa.
I take part of my post back, your right visa did claim "Our business is affected by overall economic conditions and consumer spending patterns." But in reality when economy goes down then spending on credit cards go up. That seems to be the consensus. For instance, Mastercards shares have increased and continue to increase in this badd economy. In terms of # of outstanding shares, I am concerned that Visa may not live up to the hype of Mastercard in terms of the growth of stocks, but even if it does half of what MC has done i will be happy.
I think the stock will be at least $80.00 by the end of the year and that a conservative estimate. It may hit $100 and thats not too far fetched b/c of Olymipics and the possible growth potential. I read almost every other day that a bank from China, middle east, brazil, etc.. are investing 100's of millions of dollars in this company. Which is likely to stablize the # of outstanding shares.
I like what one of the analyst said "mastercard is a ferrari" while "visa is a lamborghini". Take your pick b/c they both are good.
I am SOOOOOOOOO happy there are mentally challenged folks out there downing Visa- keep up the good work-
At first I must say that I was upset at the ignorance of the posts- but as one poster responded: "why be upset they will just help drive the price of V down for you"...
Visa will be 100$ by the end of the year- once the EU litigation is over Visa Europe will be folded back in- and for those of you who think the world is falling apart- you must be wathching too much television. I have been to 25 developing countries since the turn of the decade- and can tell you that those formerly '3rd world' countries are doing better that we are!
So much of the world is just now being exposed to credit cares (E-Europe/India/Russia... America) that even if we have a global recession with a 20 % downturn- V's growth will be 10% annually-
As far as MC- it is a joke compared to V- MC had its run-
But by all means- listen to people that are not in the business and have no skills - you will make me money!
(I work on Wall St (110 Wall)- and have been in the biz for 22 years- most of the people posting these articles do not even know how to read a prospectus- take a look at Joanne Rosen't article- and she didn't even know that V was global except for Europe- nor did she know that underwriters of an ipo do not lend out shares to short for 30 days after the event)-
Long & Strong
Visa King Of Cards Worldwide # 1
Without your bio it is impossible to evaluate your opinion about this industry or this stock. I recommend you visit creditcards.com to get a better handle on the magnitude of this market, its users and debt loads. I read that Moody's reported an increase in cc debt during the first quarter since some individuals may no longer access their HELOCs or be able to refi the piggy bank. Please share your sources of information supporting your opinion.
As one of the posters claimed:
"MA IPOed at $39.00 and now trades for over $200. What is stopping V, which is superior to MA in everyway, from having the same success?"
That is a good question, if you can answer that question please.
Please dont say the market cap b/c even if Visa is at $55bill and MC is at 30bill... visa is 3-4X bigger and should have a market cap 3-4 times bigger.
Seeking Alpha- is a joke- and needs to be exposed for what it is- apparently Sean/Joanne/Wez- are all working together trying to beat up this stock - so that whomever they are working for (as I'm sure with their combined IQs of about 78 can't afford to buy the stock themselves) can buy it cheap! Do not listen to the negativity-
I am putting my money where my mouth is- I bought 3,250 shares at an average price under $60. I will buy another 1,750 on the next big dip (which I never said would not happen)- but I am an investor- and have a vested interest in correcting children/ignorant people/and fraudulent activity)
Wez- Joanne - Sean- If you are so down on Visa- why do you care-you obviously have no interest (and most likely can't afford it)- in investing in Visa. Is your cummulative effort just to make repeatedly negative comments?
For those of you that are thinking that you may actually be getting real advice- I work on Wall Street- I own a business- the people writing these articles are not even in the business- and if they are , they pick up Starbucks for people like me :)
Listen - Visa is the best stock since Google- by far,and will blow the doors off Mastercrap- bigger market share, global penetration potential, name brand recognition..
On the 28th of April - V will announce earnings and expect to see this stock take off like a nitro-fueled rocket-
$75. within 3 weeks
$100. by the end of the year
$250. by the end of next year
$500. (or split equiv. within 3 years)
For those of you that are new to these sites- people that write these articles (and similar slams on msnmoney/google fin/yahoo fin) get PAID (not a lot - think gas station money- but for slackers it buys video games) to sit in their Apple- to slam the stock (as even though most of them are retarded even they are not stupid enough to think V is going to lose money)-to run it down so they can make a buck off you. Its the oldest trick in the book- and hopefully those of you reading these posts you will do your homework-
You will see that this is a superior company with tremendous upside potential- You have two choices:
1. Buy it now at 66.
2. Wish you bought it at 66 at 75 at the end of the month.
Visa
Briefing.com - April 11, 2008 9:33 AM ET
Related Quotes
Symbol Last Chg
V Trade 66.24 +0.13
Real time quote.
Stifel Nicolaus initiates Buy. Target $77. Stifel initiates V with a Buy and a $77 tgt based on their positive sector views and Visa's position as the global leader in electronic payments. With its dominant market share and strong product set, they expect Visa to continue to benefit from the ongoing worldwide shift from cash to plastic spending. More importantly, they believe Visa, like MasterCard, has significant pricing power supported by a wide array of payment products and services that are increasingly valuable to its customers (issuers, acquirers and ultimately merchants and consumers)
(Source : Briefing.com )
Visa is holding its own today- I traded in and out of this stock all week long- and am keeping a core position- In a market like this
THANK GOD FOR VISA- ITS WHERE I WANT TO BE :)
Joanne never did answer a question I had regarding the "recession". Her article, similar to your article, has the recession, tightening credit, delinquencies, weak economy as the reason why this stock is not a good buy.
Here's my question to you.
1. How long do you think this recession will last? (joanne thinks forever)
2. What happens to Visa stock once the recession is done and we are in a bull market?
3. What would you say is the low stock price or, in your opinion, the right valuation of this stock?
I agree with you on one thing, in a prolonged recession environment, Visa and MC earnings will decrease but they are still better positioned then stocks like Google, Apple in a long recession. If the recession and weak economy last a short time, there will be very little negative impact or none, especially since people tend to survive on credit cards when times are tough. Also, not everyone is affected by the weak economy and not everyone is defaulting on a mortgage or credit card. In fact the majority are NOT.
I think you are going to lose the April 28th earnings release and I would have to side with buyv.
Lastly, it would help greatly if Visa bought back some shares but I know they won't. They are going to buy back Visa Europe shares but that doesn't count. The high number of shares has dampened the price run that MA has seen. This is causing the PE ratio to be high, thus creating a very high valuation. If they only released 200-300 million we would see the same type of run as MA. However, I still fully expect a decent run because of the strong earnings, strong future growth and the short term shield from the recession.
I agree with your post but i had a question for you. Why is it that different website (google, yahoo, NYSE, AOL) quote different market cap.
I know that there are 800+million outstanding shares but only 400+ million shares are float. Can you explain what matters the float or the outstanding shares which will determine the P/E. I also know about the different class of stocks visa has: Class A,B,C. I also know that Visa is planning on buying back shares.....how many shares will they buy back and will that affect the # of floating shares or the number of outstanding shares....and whats the difference???
Would appreciate the reply...thanks
I got a question also for you? Since you've done lots of travelling that you mentioned in earlier posts, how does V stack up against MC? Alot of bashers and supposed big investors are saying that MC will have the bigger piece of the pie in terms of international exposure. They say MC will have more growth than V around the world (just recently stated by Navalier's fund).
I know the Olympics will be huge and I also know that V kicks MC's butt over here in the states but internationally I really don't know really.
I appreciate your advice cause you know what you're talking about and yes I have read the prospectus and the 8k filing concerning the shares so I'm not worried there.
Thanks
V has the name brand recognition- and now that it is publicly traded, the financial dominance. MC might make more headway in the Euro zone- but I believe V will gain more market penetration in Asia (including India), and South America. V has more member banks lined up in those markets. Lets not forget that China Insurance Co. (100mill) is a heavy investor as is the China's sovereign wealth fund (300 mill)- and now that the government of China has a vested interest- V will get the priority on any new or enlarged banking/card issuance ops. Same holds true with Kuwait's sovereign wealth fund (800 mill)- and there is talk about a unified gulf currency soon- which will only broaden V's exposure in all Arab (oil producing) states.
As far as South America- V has a lock on Bradesco/Banco Popular/Banco Do Brasil- and all the major players in Chile/Brazil/Columbia/...
Last, but not least- all of the major US banks (member banks) that are already global- will leverage those relationships that they have been and are going to be developing globally. One of the upside points of sovereign wealth funds buying stakes in several V member banks is that it is now in their best interest to see their holdings prosper- which, in this case means that those banks that they have invested in will gain greater entre into the markets of the wealth funds. This is, in effect, viral leverage- those V member banks will now push V into every market that is now cross polinated (Singapore/Oman/Kuwait...
The most ingenious thing that V has done is to cement its relationships with the biggest and best member banks- and, as such, gain access to both their customer base as well as their investor base and its network and so on and so on........
As I have said once before- at one time Miller and Bud were slugging it out- MCard will be the Miller beer in 2010 and V will be the Bud.
1) It keeps the litigations separate and to a minimal for each region. (i.e. Canada, middle eastern, Asia, etc.)
2) It keeps banks and institutions from making the decisions and instead it consolidates the power to management to make the decisions.
3) Most importantly, it allows more banks/institutions/fun... businesses to take part of the success of the company. This is like networking and saying to the little guy that we'll let you in on the IPO to make some money if you make us your costumer and pass the word to your buddies.
Visa knows they are a good company and have the funds to support such a valuation that they ipo'd at. Also, in business it's the small businesses that make up 60% + of the american economy.
Just my two cents worth.
Thanks. DALE
The trend is definitely not over in many growth countries.
At one time I was actually impressed with some of the commentaries from Trading Alpha. All of the good will dissipated as I continued to read one slam of V after another, mostly by people that chose to post anonymously. Most of you know why this represents a problem, but for those of you that think I am overreacting I will share one last opinion with you; mine. New investors see ‘reports’ such as those generated by Trading Alpha on their online brokerage news feeds and assume that the reports are reputable. As such, decisions are influenced in part by such commentary. Trading Alpha, unlike Yahoo or Google Finance comes in as a ‘news feed’. I am in favor of free speech and free opinions. What I am not in favor of are slam pieces that could influence investors by people that fail to disclose what education, experience, or basis they have for making such opinions, good or bad. Furthermore, anyone conducting an analysis of a stock (however crude) should disclose whether they are long or short, have a position or not, or work for someone that has taken a position. That is my concern. Perhaps I am overreacting, but in light of the fact that severe damage has been done to several firms on Wall Street by dissemination of misinformation I am hyper-alert. Yes, Bear dug their own grave but they didn’t need someone to push them in it. In the post 9/11 environment it is not a good idea to tell people that an airport might be bombed either. Having provided my two cents- I am not going to waste any more time on this site as I feel it is lacking in credibility. I will, however, be glad to come back and remind the naysayers that they were wrong all along- when the stock hits $75. Good luck for those of you taking advice or lending credence to anything the ‘authors’ of these articles have to say.
Here are three REPUTABLE Analyst opinions- all within the last few days-
Cowen & Co initiates Outperform. Cowen initiates V with an Outperform saying they expect the co to grow net revenues and EPS by at least 7%-8% and 20%+ during the next 2-3 years while gradually expanding its ROIC. The firm says the co's growth prospects as well as its attractive business model stand out among its business services peers. During the next 3-5 years, they expect Visa to benefit from strong ongoing secular growth trends in the payments sector as expanding usage of electronic forms of payments (credit and debit cards) continues to displace cash and checks.
Visa Started At Outperform By Keefe, Bruyette & Woods >V Dow Jones Newswires
Visa Started At Buy By Stifel Nicolaus >V Dow Jones Newswires
Last – and this should be obvious to those of you reading this post- the authors and their ‘friends’ have nothing at stake here which supports my argument. Of course they have no concern about any potential harm they may do to the investing public by spreading distortion- as they have nothing to lose.
Rember, do your homework- read the prospectus- learn about the company- and I am confident that if you are a V investor, you will do well short and long term.
I like Visa but not at 65 bucks...it will come down. Yes it is a great long stock and in 3 years it should be at $175...but I highly doubt you work on wall street....just a pumper. People have a right to their opinion and time will tell ( short term ) whether they are ignorant or you are.
then you'd be way off to not buy it now at 65 bucks
To those of you that doubted me and this stock, I have just one word that encapsulates what you are: LOSERS
By the way, there is no 'Sean Miller'- look at 'his' bio- and you will see that this is a pen name- as I have said all along anyone can post an analysis on this site. The problem with that is that you have people with no experience or investment knowledge doing so. My guess is that 'Sean' is actually Joanne (see 'her' earlier post). The reason I say that is that she didn't know that an underwriter can't loan shares to short an IPO for 30 days. She also didn't know that V included all global properties (other than Europe). By demonstrating that she knew very little about investments, and nothing about IPOs- she was probably too embarrassed to use her real name even if that was her name even it 'it' was a her.
Bottom line- I own several thousands of shares as a core position- also trade this stock daily. To date- I have generated a a fortune on this stock. It has been one of the best experiences I have ever had. I am smiling from ear to ear right now looking at the bid price of 75.00 at 6:49pm :)
Yes, V will have some corrections- as all stock does. BUT- this stock went from 58$ to 75$ in a little over a month- and its just starting its run. New institional ownership is less than 5%- and when the float gets soaked up- this stock will break out like a mofo. I expect $100. by the end of summer. The market has finally woken up to the fact the sky is not falling in- and after we broke the 12.900 dow resistance today- we are on the cusp of a run that should take us past 15.000 w/in the next few months.
A few final words:
Wez- You are a loser- I know you can't afford to buy the stock. You probably frequent peep shows too- as I'm sure you can't afford a real woman. Do yourself a favor- open up a virtual stock account and you can pretend you are like those of us that actual invest in V as opposed to spread their negativity.
Buy Foreclosures- You are a loser too- I understand why a bottom feeder (the carp of the financial world)- who makes a living profiting of other's misfortune- can't understand those of us with triple-digit IQs -
Adesai- You are a WINNER buddy- another true believer - congrats.
Jim West- nice talking with you too- good luck !
The best accolades for last:
Green Capitalist- I love you man! I learned about Intrepid Potash from you- I bought it at 48.25 and sold it all the next day- I'm going to give my old benz to my wife and buy a new one on the money I made on that deal alone- thanks bro.
To all of you that actually hold stock in V-good luck- see you at $100.
Jonathan
1) Visa- obviously the current price is high, relative to the PE of the S&P or anything else. However, with enough growth, high pe's can be reasonable or even cheap. Question- expound on the growth opportunities for Visa over the next 5-7 years, and why they will capture these revenue sources as opposed to MA. If you really feel that MA will experience the growth, go ahead and cover that instead.
2) What are the future downside risks to top line and bottom line for Visa?
3) Same question, but for MA.
4) Basic objective comparison of MA and V?
Here let me give it a crack- (oh- and i like how you tell people how to answer your question).Thanks for giving us a chance.......
Answers:
1. Only if whole milk is substituted for low fat in making milk shakes.
2. There are no risks to Visa-
3. There are no risks to MA
4. They are both credit cards
Did I do ok?
Guidance was STRONG
Earnings were up
Transactions were up
Global growth was up
Most important- V has not experienced any effects of a slowdown.
This stock is doing an apple (great earnings - and dropped- but back up in a week from 160 to 170+)
This will be one of the last time to buy on a correction for a long time.
Good Luck!
V at 77$ at noon
Can you say: ALL TIME HIGH
Keep it comin' V
V closed at 80.88 - all time high!!!!!!!!!!!!!!!!!!...
Biggest trading day ever volume- 42,000,000 + shares- you can bet it wasn't your aunt betty's ameritrade account that did that.
Expect a pullback in the next couple of days 3/4$- that will be small money runny- that is your last chance to hop on the V train- until 3digitville (100$).............
I told you so -
I see a hundy........
S and P upgraded Brazil to Investment Grade- which will open up the institutional money spigot.........the Bovespa was up 6% today......an all-time high, but there is still time to get on the B train....
Take a look at what the Brazilian stocks did today.....
www.stocksabroad.com/m...
An easy play is EWZ (An etf of all the major players)
I still think there is a lot of room to move.........UP
As far as V- I see 100$ within a quarter or two (most likely one)- but things are going to slow down a bit.....still a great buy and I own a big position - i am going to back off for a couple of days...
I have been trading online since 1998 and I enjoy doing so.
Visa particular struck me as one of the safest investment because I work in a call center for Directv, and I kid you not when I say 6 out of every 10 transaction I process involves a VISA card. Enough said.
V winner...I have read most of the entries on this page, but your picks (besides VISA) struck a chord. I already own Petrobras (pbr) and I am positioning to buy EWZ.
Seems like we are on the same wave length. I'm gonna bookmark this page just to pick your brain once in a while. That is, If you don't mind.