Mastercard And Visa Exceed On Earnings, But Credit Revenues Declining

Mastercard Inc MA and Visa Inc V reported fourth-quarter 2015 and first-quarter 2016 results this week, offering insight into the health of the credit industry as American Express Company AXP saw a 25 percent reduction in share price in the past 30 days.

Mastercard reported a 4 percent increase in revenue for the fourth quarter, with $2.5 billion in sales. However, the Street was looking for $2.55 billion.

Earnings beat analyst expectations by about 13 percent. Diluted EPS was $0.79, up 14 percent year-over-year. Analyst consensus saw EPS at $0.69.

The company paid out $727 million to shareholders in 2015.

“Despite a challenging economy, we were able to deliver solid results for the quarter and the full year in 2015,” said president and CEO Ajay Bang. “Entering 2016, while uncertainty in the global economy persists, the fundamentals of our business and our approach remain unchanged."

Visa met analyst expectations for earnings with $0.69 a share for the first quarter of 2016, but fell just short of revenue expectations. The company posted $3.6 billion in sales against analyst consensus of $3.64 billion.

"While we continue to see relatively strong payments volume growth, these factors have meaningfully reduced our cross-border volume and revenue growth. While these headwinds do not appear to be abating in the short-term as we had hoped, the fundamentals of our business remain strong and our long-term growth trajectory remains intact," said CEO Charlie Scharf. 

American Express posted an 8 percent decline in revenue in the fourth quarter of 2016, indicating a trend of lower sales in the credit industry.

Mastercard was dow more than 1 percent, while Visa was up about 1.5 percent.