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V, MA, and AXP: Meet the Credit Powerhouses Outperforming the Macro Blues
Many investors are wondering how payments and financial services stocks like Visa (V), Mastercard (MA), and American Express (AXP) are holding up amid macro challenges and heightened economic uncertainty around the world, which one would expect to hamper their businesses. However, it turns out they’re faring pretty well.
Let’s examine these three major financial services providers and their recent results to determine which are attractive opportunities for investors. As things stand, TipRanks’ AI analysis rates all three credit card giants as Outperform.
Performance Comparison between Visa (V), Mastercard (MA), and American Express (AXP)
Visa (NYSE:V)
Visa recently reported second-quarter results, and based on its strong performance, one would hardly expect any hint of a potential slowdown.
Despite potential headwinds created by the unfolding tariff situation, which could have crimped consumer demand, Visa posted impressive 9% net revenue growth. CEO Ryan McInerney reported that “Visa’s strong 9% fiscal second quarter net revenue growth was driven by healthy trends in payments volume, cross-border volume and processed transactions. Consumer spending remained resilient, even with macroeconomic uncertainty.”
Furthermore, one might expect the global malaise to dampen international travel (a key driver for Visa’s business). Still, the company reported that cross-border payment volume increased by an impressive 13% year-over-year. One might expect that Visa’s growth in terms of transactions would be saturated at this point, but this isn’t the case at all. The company processed 60.7 billion transactions, representing a strong 9% year-over-year increase.
Visa is a long-standing company performing well in a difficult environment, and its valuation reflects this. Priced at 30.8x 2025 earnings estimates, Visa’s valuation is on the higher end, trading at a premium to the broader market; the S&P 500 (SPX) currently trades for roughly 20x forward earnings estimates. However, it’s not as if this is an egregious, nosebleed valuation, especially for a long-term winner like Visa.
Visa is also a dividend stock, though its yield of 0.64% is below the S&P 500’s 1.4%. But look beyond the low yield; it is a compelling dividend growth stock. The company has paid dividends for the past 16 years in a row and has increased its payout in each of those 16 years (each year since going public). Visa has increased its payout by a substantial 15% compound annual growth rate (CAGR) over the past five years. With a low dividend payout ratio of just 21.5%, Visa has plenty of room to continue raising its payout for the foreseeable future.
In April, Visa’s Board of Directors authorized a new $30 billion multi-year share repurchase program. As the company continues to reduce its outstanding shares over time, the remaining shares theoretically become more valuable as Visa’s earnings are divided among fewer shareholders.
Is Visa a Buy, Sell, or Hold?
Turning to Wall Street, Visa earns a Strong Buy consensus rating based on 22 Buys, four Holds, and zero Sell ratings assigned in the past three months. The average analyst V stock price target of $379.71 implies 8.5% upside potential from current levels.
I’m bullish on Visa based on its impressive results, which demonstrate its resilience during a challenging time for many businesses. While the stock’s valuation is higher, it isn’t egregiously expensive for such a high-quality, dominant stock. I like Visa’s method of rewarding its investors through a combination of dividend growth and reducing its share count over time through share buybacks, which should continue to serve investors well going forward.
Mastercard (NYSE:MA)
Mastercard and Visa are essentially the “1A” and “1B” in the global payment rails space, and there is little separating the companies in terms of their business models.
Like Visa, Mastercard overcame any macro challenges to post impressive quarterly results. During the first quarter, Mastercard generated net revenue of $7.3 billion, an impressive 14% year-over-year increase. CEO Michael Miebach also touted the company’s impressive 15% cross-border payment growth, assuaging fears about a slowdown in international travel and spending. Additionally, the company grew its total dollar volume by 9% year-over-year, so like Visa, Mastercard is firing on all cylinders despite the fears over a looming recession.
Mastercard trades for 35x 2025 earnings estimates, meaning it trades at a premium to both Visa and the broader market. This isn’t excessive for a high-quality company like Mastercard, but Visa offers a slightly better value.
Like Visa, Mastercard is a dividend stock with a relatively low 0.51% yield. Like Visa, it’s also an appealing dividend growth stock—Mastercard has grown its dividend for 18 years in a row and grown its payout for the past 13 years in a row. Mastercard has grown its dividend at a strong 14.2% CAGR over the past five years. It also features a low payout ratio of 18.9%, meaning there is plenty of room for further dividend growth.
Moreover, Mastercard is bolstering its returns to shareholders with a flurry of share buybacks. During the first quarter, Mastercard bought back 4.7 million shares for $2.5 billion, in addition to the $694 million it paid out in dividends.
Is Mastercard a Buy or Sell Stock?
Turning to Wall Street, MA earns a Strong Buy consensus rating based on 18 Buys, two Holds, and zero Sell ratings assigned in the past three months. The average analyst MA stock price target of $634.76 implies 12% upside potential from current levels.
Like Visa, Mastercard’s valuation is a bit high. Still, I view the stock favorably based on its excellent recent results during a trying time, and its compelling combination of share buybacks and dividend growth.
American Express (NYSE:AXP)
Last but certainly not least, let’s examine American Express. The company also recently released quarterly results, and its performance was impressive.
On that note, CEO Stephen J. Squeri assuaged investor fears by reporting that while the company saw a sequential slowdown in airlines billing growth, “billings in restaurants and lodging remained strong in the quarter, and overall T&E (travel and entertainment) growth was in line with the steady levels we saw through most of last year.”
Squeri also found that T&E spending looked healthy through early April, when we were in the thick of the tariff malaise. American Express also believes its affluent, premium customer base will help it weather any economic storm. Squeri reminds investors that the company’s “card members at high incomes are loyal, high spending, and have excellent credit profiles.” Overall, management felt confident enough to maintain its full-year revenue and earnings per share guidance.
With its valuation, American Express is undemanding. Shares trade for 18.2x 2025 earnings estimates, representing a slight discount to the broader market and a steep discount to Visa and Mastercard. However, it should be noted that American Express has a different business model from these companies and features credit risk that Visa and Mastercard do not have exposure to, so some discount is understandable. Either way, it looks like an attractive valuation for American Express on a standalone basis.
Like its aforementioned peers, American Express is a dividend stock, featuring a yield of 1.06%. This means that American Express sports a higher yield than Visa or Mastercard, which is roughly in line with the broader market. The company has paid a dividend for 35 years in a row, and grown it for the past three years. It features a modest payout ratio of 21.4% and has grown the dividend at an 11.7% CAGR. American Express is also returning capital to shareholders via share buybacks; the company reduced its average diluted shares outstanding by 3% during the past quarter.
Is American Express a Good Stock to Buy?
Turning to Wall Street, AXP earns a Moderate Buy consensus rating based on nine Buys, 10 Holds, and one Sell ratings assigned in the past three months. The average analyst AXP stock price target of $288 implies 4.3% upside potential from current levels.
AXP is a strong company that has executed and performed well during a turbulent time. Like its peers, it features a modest valuation and an attractive combination of dividends and share buybacks.
Visa and American Express Stand Out Among Credit Card Stocks
All three of these stocks are strong options for investors. They are resilient businesses that continue to grow revenue and deliver solid results, even as many companies struggle with economic uncertainty and the threat of tariffs. Each also returns capital to shareholders through rising dividends and substantial share buybacks.
Performance Comparison between Visa (V), Mastercard (MA), and American Express (AXP)
Given these strengths, I believe any of the three would make a solid investment. However, my top picks are Visa and American Express. Visa and Mastercard both operate high-quality business models as key players in the global payments network, but Visa stands out with its lower valuation and slightly higher yield, making it the more attractive of the two. I’m also bullish on American Express, thanks to its combination of a cheaper valuation, higher dividend yield, and aggressive share repurchase program.
