Dow Jones payments giant Visa is the IBD Stock Of The Day for Wednesday. Visa stock broke out for the third time since April as part of its 19% run-up this year.
Credit card giants Visa and Mastercard are holding up even as retailers caution of slowing consumer spending. Spikes in transaction volume and cross-border payments from the travel rebound fueled earnings beats for both companies the past four quarters.
More broadly, the U.S. consumer has remained resilient in 2023.
For Q3 results in July, Visa reported 9% adjusted earnings growth to $2.16 per share on 12% revenue growth to $8.1 billion. Analysts expected earnings of $2.11 per share on $8.06 billion in revenue.
Payments volume increased 9% for the quarter while cross-border volume popped 17%.
Service fee revenues rose 15% to $3.66 billion, topping expectations of $3.63 billion. Data processing fees also rose 15% to $4.1 billion, beating FactSet estimates of a 10.8% gain. International transaction revenue swung 14% higher to $2.92 billion, but fell short of forecasts of $3.01 billion.
Elsewhere, Visa and Mastercard plan to raise fees that merchants pay when accepting customer credit cards, the Wall Street Journal reported Aug. 30. The fee increases are scheduled to start in October and April, with many of the hikes for online purchases.
Unlike many other credit card companies, including American Express and Capitol One, Visa and Mastercard don't carry card balances. Those are handled by issuer banks such as JPMorgan Chase and Citigroup.
Instead, the two payment giants make their money from processing fees.
Visa Stock
Visa stock rose 0.5% to 246.50 on Wednesday, off session highs but nudging past a 245.37 buy point for a flat base. The move marks Visa's third breakout since April. The flat base is just above a prior flat base, so this is a base-on-base pattern.
Base-on-base patterns are especially bullish when the overall market is going sideways or struggling. While the market is now in a confirmed uptrend, the S&P 500 is still some distance below its 52-week high set in late July. As a result, the relative strength line for Visa stock has climbed over that span.
The most recent flat base settled more than 2% above 10-week support and shares are trading above their technical moving averages. The current buy zone, which stretches 5% beyond the buy point, extends to 257.63.
V stock rallied nearly 19% in 2023 through Wednesday. Shares are approaching their record high of 252.67 from July 2021.
Visa stock has a 93 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Visa has a strong 90 EPS Rating based on its earnings track record. The stock's relative strength line has fallen from its early January highs and it has an 83 RS Rating.
Meanwhile, MA stock climbed 1% to 415.78. That's still in range of Mastercard's own flat base/base-on-base buy point of 405.19.
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