Visa and MasterCard Go Head-to-Head With Earnings Announcements This Week


Despite the market being closed as New York is in the throes of Sandy, it will be business as usual for a lot of companies. Though some have decided to delay quarterly announcements until later in the week, there are many others who will proceed with earnings releases as planned. Two such companies are very similar and will both release earnings early on Wednesday morning. They are credit card companies Visa (NYSE: V) and MasterCard (NYSE: MA).

Visa has been in the news a lot over the past few weeks. It announced a new CEO last week, who will be replacing the CEO that took Visa public in 2008. It also pre-empted its earnings report yesterday by announcing a 50% increase to its quarterly dividend. MasterCard has been quiet in the few weeks leading up to earnings, but you never know when big news could be announced with earnings.

What analysts are expecting
For Visa, analysts are expecting an 18% jump in earnings from the same quarter last year, up to $1.50 per share. Revenues are expected to come in at $2.67 billion, a 12% increase from last year. Visa has been performing well against analysts' expectations recently, beating estimates during the previous four quarters.

Analysts are also expecting an increase in earnings and revenue for MasterCard, though not nearly as large as Visa's. Earnings are expected to climb 5% from last year to a robust $5.93 a share. Revenues are also expected to see a modest gain, checking in at $1.94 billion, a 6.7% increase from last year. Like Visa, MasterCard has beaten earnings expectations in each of the previous four quarters, a trend it hopes to continue on Wednesday.

What else to watch for
Visa and MasterCard are already leading their industry in payment processing, with both getting fees from multiple sources whenever someone uses a credit card in a transaction. With a push toward mobile payments -- Starbucks' (NASDAQ: SBUX)recent deal with Square a fine example -- both of the major credit card companies could stand to gain from a push into similar agreements with merchants.

A move to mobile could also be done in a manner similar to American Express(NYSE: AXP) and its partnership with Twitter. American Express cardholders can sync their Twitter and Amex card together and be offered deals at participating retailers simply by tweeting. A little "Big Brother-y" for sure, but another way that American Express is building relationship with its customers.

With the recent announcement that PayPal, eBay's (NASDAQ: EBAY) payment service, will be cutting jobs to compete better in the payment space, Visa and MasterCard could stand to benefit. They are already partners in Groupon's (NASDAQ: GRPN)Payments service that was launched last month by the struggling daily deals provider.

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Robert Eberhard owns shares of Starbucks. Follow him on Twitter for more earnings news over the next week. The Motley Fool owns shares of MasterCard and Starbucks and has the following options: short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend American Express Company, eBay, Starbucks, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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