January 29, 2024
The charge card industry remains robust, defying recession concerns as Visa (V) and American Express (AXP) report substantial growth in payment volume and processed transactions.
Visa (V):
- Net Revenues: $8.6 billion, a 9% increase.
- Net Income: GAAP $4.9 billion, or $2.39 per share; non-GAAP $4.9 billion, or $2.41 per share.
- Payments Volume Growth: Stable growth observed.
- Cross-Border Volume Growth: Strong performance.
- Share Repurchases and Dividends: $4.4 billion returned to shareholders.
- Business Drivers: 8% YoY increase in payments volume, 16% increase in cross-border volume, 9% increase in processed transactions.
CEO Ryan McInerney highlighted a solid start to the fiscal year, driven by overall growth in payments volume, processed transactions, and robust cross-border volume. Consumer spending resilience and opportunities across payment sectors contribute to positive prospects.
American Express (AXP):
- Revenue: Record full-year revenue of $60.5 billion, up 14% reported, 15% FX-adjusted.
- Earnings Per Share (EPS): Full-year EPS up 14% to $11.21.
- Dividends: The quarterly dividend will increase by 17% to $0.70 per share.
- Billed Business: $379.8 billion in Q4 2023, up 6% YoY.
- Provisions for Credit Losses: $1,437 million in Q4 2023, up 40% YoY.
- Net Income: $1,933 million in Q4 2023, up 23% YoY; full-year net income $8,374 million, up 11% from 2022.
- 2024 Guidance: Revenue growth of 9% to 11%, EPS of $12.65 to $13.15.
CEO Stephen J. Squeri highlighted record revenues and profits in 2023, emphasizing strong customer engagement and demand for premium products. The company’s strategic growth, with over 140 million cards in force and a 40% revenue increase since January 2022, underscores the resilience of its business model.
In conclusion, Visa and American Express both exhibit notable financial strength, positioning them for continued growth and investment opportunities in the evolving charge card industry.
For investors, Value Line rates the financial strength of both companies as A++.
From TipRanks, there were 21 Wall Street analysts offering stock ratings and 12-month price targets for American Express (AXP) in the last 3 months. There were 10 Buy, 8 Hold, and 3 Sell. The average price target is $205.53, with a high forecast of $235.00 and a low forecast of $159.00. The average price target represents a 2.38% change from the last price of $200.75.
For Visa (V), there were 20 Buy, 2 Hold, and zero Sell ratings, and the average price target is $301.90 with a high forecast of $326.00 and a low forecast of $265.00. The average price target represents a 10.89% change from the last price of $272.25.