This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Visa, MasterCard and the Power of Plastic

By Nate Matherson of Circa Alpha

NEW YORK (TheStreet) -- I just want to say one word to you: plastics. As in American Express (AXP - Get Report), Discover Financial Services (DFS - Get Report), Visa (V - Get Report) and MasterCard (MA - Get Report).

As we progress through yet another earnings season I want to look at the earnings in one of my favorite industries, payment processing and card services. This sector gives us a unique insight into both the financial and consumer discretionary sectors, which may be on the rise.

Over the last couple weeks. all of four companies have reported earnings. In this article I would like to review some key pieces from each of these reports while offering company-specific and industry analysis.

Must Read: Old-School REIT Investing

American Express reported 2013 operating earnings per share of $1.25, comfortably surpassing both the consensus estimate of $1.22 and the year-ago quarter's $1.09 a share. Global card spending bolstered the company's net income from operations by 9% year over year to $1.37 billion, from $1.25 billion in the third quarter of last year. Card spending rose by 7% year over year to $236.2 billion a result of international cards-in-force gains of 7% and cards-in-use gains of 8% in the United States.

American Express registered 6% growth on the top line as due to strong growth in card spending, gains in net interest income and the loan portfolio portfolio. Delinquency rates stabilized while provisions for losses were $492 million, up 3% from $479 million in the third quarter of last year. Total expenses increased 5% year over year to $5.81 billion in the reported quarter as expense related to the company's famed card member rewards program rose 8%. Expenses related to professional services jumped by 15%.

I want to focus on the 43% net income gains seen within the Global Commercial Services revenue segment. Higher spending by corporate card members and growth in business travel commissions and fees allowed the company to bolster revenue. Improving revenue from the company's business customer signals, I hope, a turnaround in corporate spending, a key revenue segment for many companies across a number of sectors. Moreover, higher corporate spending signals higher corporate confidence meaning stronger perceived economic strength.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AXP $77.72 0.00%
DFS $57.62 0.00%
MA $93.48 0.00%
V $67.15 0.00%
AAPL $125.42 0.00%

Markets

DOW 17,619.51 +23.16 0.13%
S&P 500 2,063.11 +5.48 0.27%
NASDAQ 4,986.8670 +28.3990 0.57%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs