Queens of the universe processing of payments, visa NYSE: V. And MasterCard NYSE: AContinue to show strength, since the macroeconomic environment works in their favor. Against the background of the growth of interest rates over the past few years, one thing that has remained relatively strong is consumer expenses. In the last quarter, consumer expenses increased by 4.2%, which is the fastest pace from the first quarter of 2023. In December alone, expenses increased by 0.7%, exceeding the estimates of analysts.
The Bureau of Economic Analysis also shows that the Americans saved less to spend more. The income increased by only 0.4%, which was less than expenses, which means that people reduced their savings to make up for the difference. This is not a great sign for the personal finances of Americans, but it helps companies such as Visa and MasterCard. More expenses leads to an increase in the volume of payment that pass through the networks of these companies. These companies mainly bring income, charging a fee for the cost of transactions.
BelowI discuss the latest results of these two shares of financial services that show strong consumer expenses are broadcast To their business. I also discuss the potential impact of business tariffs and why I’m not too concerned.
Volume, income and growth of profit is strong
Both companies saw a significant increase in the volume of payments that passed through their networks in the last quarter of 2024. This figure increased by 9% for VISA, which acceleration from 8% in the third quarter. For MasterCard, this figure increased by 12%, compared with 10%. These are the most important income growth factors for both companies. They helped VISA income by 11%, and MasterCard revenues increased by 16% on a constant currency basis. This highest growth helped Visa and MasterCard increase their adjusted profit per share (EPS) by 14% and 22%, respectively.
Analysis of the effect of tariffs
Visa today
Visa
- 52-week range
- $ 252.70
▼
$ 351,25
- Dividend yield
- 0.68%
- P/e ratio.
- 35,11
- Value is valuable
- $ 354.73
With the announcement of President Trump on new tariffs in large trading partners, it is appropriate to discuss the potential influence on Visa and Mastercard. Trump announced tariffs of 10% per China, 25% for Canada and 25% per mexico. Trump agreed to suspend tariffs for Mexico and Canada, but they remain on the verge of implementation and will significantly affect the economy.
Looking back at the first trade war, Trump began with China, can give some understanding. Trump began to set tariffs for China in July 2018 before significantly reduced them in January 2020. During this period, the Visa and MasterCard shares increased by 53% and 43%, respectively. The volume of cross -border transactions of both companies has increased significantly during this time. Theoretically, tariffs can negatively affect the volume of transactions transactions, since consumers do not want to pay higher prices. Nevertheless, this can lead to the fact that consumers will simply switch to similar products from their country, to which Visa and MasterCard can still collect the commission.
MasterCard today
MasterCard
As of 02.02.2025 20:59
- 52-week range
- $ 428.86
▼
$ 576.94
- Dividend yield
- 0.54%
- P/e ratio.
- 40.50
- Value is valuable
- $ 603.08
Ultimately, a great concern for a visa and a master card around tariffs is that they can significantly reduce economic growth, which will lead to a reduction in the volume of payments. This is a real opportunity if tariffs exist for a long period. Weather forecasters in JPMorgan Chase & Co. NYSE: JPM Democrates of growth by 0.5% to 1% if tariffs for Mexico and Canada were set for a long period. However, they also predict inflation to increase by the same amount. Inflation from the tariffs increases the visa and volume of MasterCard payments and the corresponding income from the board.
Thus, tariffs can generally lead to a neutral impact on visas and MasterCard income, as growth slows down and prices are rising. At the moment, I do not see tariffs as a big risk for a visa and MasterCard in the future.
Outlook for Visa and MasterCard
Visa and MasterCard allow most of the world economy to work, and they can continue to expand. The payment industry is huge. It extends from everything to cash, card, check, wire payments, billing, payments and money transfers. MasterCard believes that the total payments market in the amount of $ 154 trillion. Think about all payments in the countries of developing markets that are still using money on cards. In 2024, Visa and MasterCard united about 24 trillion US dollars in the amount of payments. This signals that these companies have a significant place to grow into the general market as digitization expands.
Analysts for Wall Stracks widely raised targeted prices at both firms after the last results. The average prices of analysts after recent profits suggest a 12% potential for a visa and 14% growth for MasterCard in comparison with their closure prices on February 3. In general, I remain optimistic on Visa and MasterCard promotions. With the exception of global economic slowdown or recession, these shares may continue to impress.
Before considering MasterCard, you will want to hear it.
Marketbeat monitors the highest and most effective analysts with the most effective Wall Street analysts and promotions that they recommend to their customers daily. Marketbeat has identified five shares that leading analysts quietly whisper to their clients to buy now before the wider market is won … and MasterCard was not on the list.
While MasterCard currently has a “moderate purchase” rating among analysts, analysts with the highest rating believe that these five promotions are better buying.
View five shares here
Want to know where to start (or finish) with AI shares? These 10 simple shares can help investors create long -term wealth, since artificial intelligence continues to grow into the future.
Get this free report