Visa, Mastercard to post earnings this week – here’s what to expect

Visa (NYSE:V) and Mastercard (NYSE:MA) are slated to post quarterly earnings this week, with “clear bifurcation in sentiment” persisting between the two payment network behemoths, according to TD Cowen analyst Bryan Bergin.

Visa’s (NYSE:V) fiscal Q4 adjusted EPS is expected to advance to $2.58 from $2.42 in FQ3 and $2.33 a year ago, and revenue is anticipated to climb to $9.49B from $8.90B in the prior quarter and $8.61B a year earlier, according to the average analyst estimate. Similarly, Wall Street sees Mastercard’s (NYSE:MA) Q3 adjusted EPS rising to $3.75 from $3.59 in Q2 and $3.39 in Q3 2023, and its revenue accelerating to $7.27B from $6.96B in Q2 and $6.53B a year before.

Visa’s (V) report is due out after Tuesday’s closing bell, followed by Mastercard’s (MA) report on Thursday.

“A clear bifurcation in sentiment persists between V & MA w/ relative growth concerns spurred by V’s July volume read only being exacerbated by the DOJ suit, though QTDAugust trends do convey stability,” Bergin wrote in a recent note to clients.

As such, shares of Mastercard (MA) have trounced that of Visa (V) this year, with the former rising 19.4% vs. the latter’s 8.7% increase. Both stocks, however, are still trading below their five-year averages, the analyst, who views each stock as a Buy, noted.

The two companies have a strong track record in beating quarterly top and bottom line estimates. Over the last two years, Visa (V) turned in eight profit beats – a perfect score – and seven revenue beats. Mastercard (MA), meanwhile, delivered earnings and revenue beats in each quarter dating back two years.

With U.S. bank-reported spending volumes decelerating Y/Y in Q2 to Q3, Bergin thinks both Visa (V) and Mastercard (MA) will report U.S. volumes “in-line to slightly below” Q2 levels. “Recent company commentary suggests US volumes are tracking in line with July-reported results,” he added. Visa’s payment volume slowed somewhat from the pace clocked in its fiscal Q2, while Mastercard’s volumes stayed strong.

In the run-up to Mastercard’s (MA) earnings, Seeking Alpha analyst Dan Victor thinks the company is “well-positioned to keep delivering on its financial targets,” even though expectations for the report are high. He gives MA a Neutral rating.

On Visa (V), fellow SA contributor Eric Nickolaison thinks the network will discuss the DOJ lawsuit and future implications during its earnings call. In all, he believes Visa “will continue to be a compounder of free cash flow over the next 5 years, I just don’t like the valuation.”

“Because of the key differences between Mastercard and Visa, I believe the latter is slightly better positioned to capitalize on the growth opportunities outside of consumer payments,” said SA’s Yuval Rotem.