Visa Announces Dividend Increase

Visa, Inc. (Ticker symbol: V) released quarterly numbers on Friday along with raising its quarterly dividend. The American multinational financial services corporation reported an earnings per share beat of  $1.47 vs. Wall Street analysts’ expectations if $1.43 per share. The Foster City, Calif.-based company reported a revenue beat of $6.1 billion vs. Wall Street analysts’ expectations of $6.08 billion. Visa’s payments volume rose by 9% for the quarter while processed transactions rose by 11% for the quarter.  The company also announced a 20% dividend increase.

Additionally, competitor The American Express Company (Ticker Symbol: AXP) also reported earnings and revenue for the quarter that were better than analysts were expecting. American Express reported an earnings per share beat of $2.08 vs. Wall Street analysts’ expectations of $2.03 per share.  The company reported an 8% rise in total revenue to $11 billion, which was led by higher customer spending, card fees, and net interest income.  The global movement away from cash towards cards and e-commerce payments has been a huge boost to both Visa and Mastercard revenue.

The above image is of Visa’s stock from roughly the past two years. Visa’s stock started off positively in 2018 finding dynamic support multiple times at its 100-day moving average in the first and second quarters while forming an ascending triangle. In an ascending triangle the top part of the triangle appears flat and the bottom part of the triangle has an upward slant. Buyers come in at the lows and the stock starts to move higher. The stock makes a higher low and then retests the old highs again. The stock broke out from that pattern to the upside and proceeded to rally nearly 20% before finding some technical resistance just above the $150.00 price level.

In the fourth quarter of 2018, Visa’s stock pulled back losing all of the previous gains it had made for the year.  In that same quarter, the stock bottomed forming a bullish divergence pattern, as indicated on the chart by the yellow lines, where the stock makes a lower low in price but the Relative Strength Index makes a higher low.  Visa then broke above its downtrend and continued to rally over 30% to trade to an all-time high of $187.05 on September 9th, 2019.

Currently, the stock is positive for the year and is trading just above its 100-day moving average.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of nine analysts offering 12-month price targets, the average price target for Visa’s stock is $202.78. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $179.81.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of eight analysts offering 12-month price targets, the average price target for American Express’s stock is $131.50. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $118.83.

Investors in the credit card space should look to Visa’s next earnings release on January 31st or American Express’s next earnings release on January 19th for fresh new within the sector.

 


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