Discover Financial Services

American Express (AXP) expects its full-year 2016 EPS to be between $5.40–$5.70. It looks to return to positive EPS growth in 2016 and is targeting a minimum of $5.60 EPS for 2017.

Potential new developments from the Fed include a suggestion by the subcommittee on communications that median values of policymakers’ projections be published.

MasterCard’s rebates and incentives rose by 18% to $1.0 billion in 1Q16—higher than expected, mainly due to the timing of some deals and acquisitions.

Capital One Financial Corporation’s (COF) PE (price-to-earnings) ratio is 8.77x on an NTM basis compared to its competitors’ average PE ratio of 20.79x.

Visa (V) has maintained its operating margin above 60% over the past few years. The company’s major expenses include personnel, marketing, network and processing, and professional fees.

Visa’s total transactions grew by 11% on a YoY (year-over-year) basis in fiscal 4Q15. The company reported total transactions of 27.9 billion in fiscal 4Q15, as compared to 25 billion in fiscal 4Q14.

Payment processors are seeing major changes in 2016, including increased competition on pricing and the adoption of new technologies such as wearables.

Payment processors are rewarding their shareholders with 1%–2% dividend yields, largely dependent on operating performance.

MasterCard (MA) has debt of $3.3 billion with a total balance sheet of $15.9 billion as of March 31, 2016. This compares to $16.2 billion in 4Q15.

American Express (AXP) has been using its strong balance sheet position to consistently declare dividends to its shareholders.

Co-branding relationships are an important part of the American Express business model. The costs of renewing and extending these relationships is increasing.

Five analysts suggested a “hold,” one recommended a “strong sell,” and nine recommended a “strong buy” on DFS stock.

Discover Financial’s (DFS) stock price rose from $14.70 at the end of 2009 to $65.50 at the end of 2014. This is an increase of 346%.

PayPal’s faces competition from almost all angles. But its peer-to-peer payment service, Venmo, has become a source of great hope.

Payment processors are rewarding their shareholders with dividend yields of 1%–2%, depending largely on operating performance.

Apple is reportedly in talks with major banks in Canada, and it partnered with Union Pay in China last year to broaden the reach of Apple Pay.

Visa announced partnerships with the China Foundation for Development of Financial Education and the China Foundation for Poverty Alleviation.

Visa (V) is trading at a forward PE ratio of 27.7x, which is higher than its five-year average PE ratio of 24.5x.

The Walt Disney Company is among those large American companies that have launched back-to-school programs for their employees.

A healthy job market and a steady hike in wages have increased the spending power of consumers.

Mastercard (MA) is scheduled to report its third-quarter results on October 30.

The US GDP grew 4.2% in the second quarter, which was almost double the 2.2% increase registered in the first quarter.

Visa (V) plans to report its Q4 2018 earnings on October 24. Analysts expect Visa to report EPS of $1.20, marking YoY growth of 33.3%.

The Consumer Confidence Index increased to 133.4 in August from 127.9 in July—its highest reading since its October 2000 reading of 135.8.

Improving GDP growth, a healthy job market, and steady wage growth have increased the disposable income of consumers, thereby giving them greater spending power.

Visa stock (V), which was around $78 at the beginning of 2017, now trades close to $143, a jump of over 83%.

Analysts’ rating on Mastercard (MA) improved in July compared to June.

Visa (V) has been making efforts to increase the use of contactless payments in the United States after experiencing a positive response.

Mastercard (MA) has a price-to-earnings ratio of 28.04x on an NTM (next-12-month) basis compared to the peer average of 15.95x.

In the second quarter, Mastercard (MA) witnessed total gross dollar volumes (or GDV) of $1.5 trillion.

On July 26, Discover Financial Services (DFS) released its earnings report for the second quarter.

On July 25, Visa (V) is scheduled to report its results for the third fiscal quarter. Analysts expect Visa to post an EPS of $1.09.

Mastercard (MA) is set to release its second-quarter earnings report on July 26. What can we expect?

Capital One Financial (COF) posted second-quarter results on July 19.

On July 18, American Express (AXP) is expected to report its Q2 2018. Analysts expect EPS to be $1.82 compared to $1.86 in the first quarter.

Capital One (COF) is expected to release its Q2 2018 earnings on July 19. Analysts expect EPS of $2.68, a YoY rise of 38.1%.

Growing trade tensions are a primary concern, as they could impact the performances of Discover Financial Services (DFS) and its peers.

Discover Financial Services (DFS) generated net interest income amounting to $2.1 billion in the first quarter.

The economic and business environment prevailing in an economy affects the business fundamentals of payment processing giants like Visa (V) and Mastercard (MA).

In June, eight of the 32 analysts covering the stock have given it a “buy” rating, and two analysts have given it a “strong sell.”

On June 25, the Dow Jones Industrial Average saw strong downward pressure primarily due to escalating US-China trade tensions.

The second quarter could be beneficial for American Express (AXP) due to an expected rise in consumer loans and transactions.

Mastercard (MA) released its earnings report this morning. The company reported earnings per share or EPS of $1.50 in 1Q18.

Visa’s (V) price-to-book ratio stands at 6.83x on a next-12-month basis, implying a premium valuation compared to its peer average of 3.09x.

Of its total fiscal 1Q18 net operating revenue of $4.9 billion, Visa’s service revenue made up $2.1 billion, or 44.1%.

Visa (V) announced its acquisition of Fraedom, which provides payment solutions for financial institutions.

Discover Financial Services (DFS) has a PE (price-to-earnings) ratio on an NTM (next 12-month) basis of 10.26x, while the average for its peers is 13.97x.

As of September 30, 2016, Visa (V) has reported a total asset balance of $64.03 billion. As of June 30, 2017, the company managed to report a total asset balance of $64.00 billion.

American Express (AXP) witnessed a rise of 12.0% in its proprietary cards volume in 2Q17, which reflects a marginal increase of 1.0% from 1Q17.

Consumer financial companies such as American Express (AXP), Mastercard (MA), and Visa (V) beat analysts’ estimates for EPS (earnings per share) in 2Q17.

Visa (V) will report its fiscal 3Q17 earnings on July 20, 2017. Wall Street analysts expect Visa to report EPS of $0.81 per share—a decline of 5.8%.

American Express’s (AXP) International Consumer and Network Services segment reported a 16.0% rise YoY (year-over-year) in net income for 1Q17.

American Express (or Amex) (AXP) has entered into digital partnerships with Airbnb, Facebook (FB), and Uber in order to offset the revenue loss from Costco (COST).

MasterCard’s (MA) growth trajectory in the Middle East is expected to continue in the upcoming quarters.

Analysts have a positive outlook on Visa (V) for the rest of fiscal 2017 mainly due to the company’s expansion plans in the Asia-Pacific region and its strong payment volume projections.

Over the past five years, Visa (V) has spent $20 billion in various buyback programs.

Visa (V) management expects its payments volume to continue in 2H17.

MasterCard (MA) generated $4.5 billion in operating cash flows for 2016. That’s a rise of 10.9% on a year-over-year basis.

32 of the 36 analysts covering Visa (V) rated it a “buy” or “strong buy” in March 2017.

The payment processing industry is witnessing major changes globally due to regulatory changes, increased competition, and a demand for continual innovation.

Visa is trading at ~21.3x on a one-year forward earnings basis. Its peers are trading at an average of 16.4x.

Visa (V) increased its leverage, including current maturities and long-term debt, to $16.4 billion in fiscal 1Q17 against total equity of $31.7 billion in 1Q16.

Visa (V) reported a total of 40.8 billion transactions in fiscal 1Q17, compared to 29.0 billion in fiscal 1Q16. That’s a rise of 41.0% year-over-year.

American Express expects its earnings per share to be between $5.60 and $5.80 in 2017 on the back of revenue growth, marketing spending, and operating expenses.

MasterCard (MA) has seen a steady rise in processed transactions on the back of rising transactions in international markets.

American Express’s (AXP) Global Commercial Services (or GCS) segment formed 31% of the company’s total revenue in 4Q16, in line with the previous quarter.

American Express’s (AXP) International Card Services segment’s revenue rose 2% to $1.4 billion in 4Q16, compared to $1.3 billion in 4Q15.

Visa (V) has been commanding premium valuations over the past few years on a strong brand, high growth, diversified portfolio, and improved technology.

Payment processors are now seeing improved performances on increased spending, new technologies, expansion into global markets, and the stable US dollar.

Consumers are making more payments through mobile platforms and internet-based purchases, which has been beneficial for the payment processing industry.

Amex expects its EPS to be between $5.65 and $5.75 in fiscal 2016, including the restructuring charges of first three fiscal quarters of the year.

Visa’s (V) stock has risen 15% over the past six months, mainly due to consumer spending, new partnerships, and geographic expansion.

Visa (V) posted an operating profit margin of 64% in fiscal 4Q16, in line with the prior year’s quarter and lower than the previous quarter’s 68%.

In the June 2016 quarter, Visa (V) added another $5 billion to its share repurchase program, bringing the total to $7.3 billion.

American Express’s (AXP) Global Network and Merchant Services segment contributes 14% of the company’s total revenues.

American Express (AXP) has been looking to expand its business internationally amid high competition in the domestic markets.

Currently, MasterCard (MA) is trading at 24.7x on a one-year forward earnings basis. Its peers are trading at an average of 18.1x.

MasterCard’s 2Q16 operating expenses, after excluding non-operating items, rose 12%–13% on similar currencies.

More than 60% of MasterCard’s (MA) business comes from its International segment. The company benefits from partnerships, corporate programs, and rebates in Europe and Asia.

MasterCard saw its EPS rise 10% in 2Q16. The company expects to generate higher net EPS on stable currency in 2016.

American Express (AXP) expects its EPS to be adversely affected year-over-year. It expects its 2016 EPS to be $5.40–$5.70.

American Express’s (AXP) adjusted net profits rose 7% in the June quarter on increased spending, especially in international markets.

American Express’s (AXP) Global Network and Merchant Services segment’s revenues are expected to be low in the September quarter. The division operates a global payments network.

American Express’s (AXP) Global Commercial Services segment’s total revenues, net of interest expenses, remained flat at $2.5 billion in 2Q16.

American Express’s (AXP) revenue decline in the domestic market has been partially offset by growth in international markets.

American Express’s (or Amex) (AXP) US Card Services segment has had strong competition from local players on the incentives front as well as in striking new partnerships.

Visa (V) stock has risen by 12% over the past six months as a result of strong consumer spending, the addition of new clients, and volume growth from existing clients.

Visa (V) announced a new $5 billion share repurchase program, which increases the total available for share repurchases to $7.3 billion.

Visa (V) reported total transactions of $30.2 billion in fiscal 3Q16, compared to $27 billion in fiscal 3Q15—a growth of 11.8% year-over-year.

Visa’s full-year operating cash flows in fiscal 2016 are expected to be $7 billion.

Visa (V) reported total transactions of $30.2 billion in 3Q16 compared to $27 billion in 3Q15, a growth of 11.8% year-over-year.

Visa expects 2% to 3% expense growth for legacy Visa in 4Q16 from marketing and higher technology project spending related to the Rio Olympics.

American Express’s (AXP) US Card Services segment’s total revenues, net of interest expenses, fell 3% to $3.2 billion in 2Q16.

American Express’s (AXP) adjusted net profits fell by 6% in 1Q16 on a strong dollar, increased competition, and higher spending.

American Express expects its 2016 EPS to be $5.40–$5.70. It expects to return to positive EPS growth in 2016 and is targeting a minimum of $5.60 for 2017.

Amex’s (AXP) Global Network and Merchant Services segment formed 14% of the company’s total revenues. The segment’s total revenues, net of interest expense, fell by 3% to $1.1 billion in 1Q16.

Payment processors have increased their leverages for the purpose of organic and inorganic expansions.

Visa (V) has maintained its operating margin above 60% over the past few years.

MasterCard posted an operating margin of 55% in 1Q16, which was in line with the prior year’s quarter. Operating income remained flat.

In 1Q16, MasterCard (MA) reported total processed transactions of 12.6 billion compared to 11.0 billion in the prior year’s quarter.