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4 Payment Stocks Likely to Maintain Winning Streak in 2024
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Resilient consumer spending, geographic expansions and improved cross-border volumes are primary drivers for companies in the payment industry. As consumers continue their transition journey toward digital methods of payments, payment processing companies stand to benefit from higher transaction volumes and improved transaction processing fees. Per Fidelity Information Service’s Global Payments Report, cash is estimated to account for less than 13% of overall payments across the globe.
Continued innovation, enhanced security of transactions and expansion initiatives should continue to benefit payment companies like Mastercard Incorporated (MA - Free Report) , Visa Inc. (V - Free Report) , American Express Company (AXP - Free Report) and Global Payments Inc. (GPN - Free Report) .
Per Mastercard Economics Institute (MEI), the year 2024 will be characterized by easing inflation and a relatively stable labor market fueling consumer spending. As inflation pressure softens across most global economies, consumers will be able to expend more, benefiting companies in the payments space. MEI expects the consumer price index, measuring inflation, to cool down to 4.9% globally in 2024 from 6% in 2023. Although this number will be higher than the pre-pandemic trend of 2.7%, consumer spending should not take a hit as signaled by improved travel-related spending post-pandemic and growth in U.S. retail sales in the 2023 holiday season amid inflationary pressures.
Companies in the payments space often resort to mergers and acquisitions strategy, reaping the benefits of diversification. Diversifying around products or geographical markets protects them from resorting to a few selected products or geographies, insulating their top line from unfavorable shocks. Visa and Mastercard undertake several opportunities to expand their geographical reach to new regions and expand business inorganically. The industry has also been undertaking significant technological investments aimed at modernizing the digital payments space.
Companies dealing with billions of transactions have the responsibility to protect data. Hence, enhanced security turns out to be an important value proposition for payment companies. With the changing landscape of digital payments, contactless payments or virtual cards are gaining popularity. Per Juniper Research, the global transaction value of contactless payments is expected to be $10 trillion by 2027. Tap to Pay and virtual cards introduced by the companies should act as a key innovation, enhancing its offerings and providing better security. Per Mastercard, virtual cards should bring in savings of 50 cents to $14 per transaction.
Amid the looming tensions in the regulatory environment of reducing swipe fees, companies have held their positions firm. Mastercard believes if the swipe fees are reduced, it will have a negative impact on small businesses and consumers. Companies in the payments space utilize the funds generated from swipe fees to enhance security measures and provide reward programs. Curtailing on such a source of revenue might impact the security of transactions, thereby impacting these companies’ core value proposition. Firms in the payments industry are also keeping up with the trends by aiming to gain from technologies like Generative AI, which would transform fraud detection measures.
Although the regulatory environment and high interchange fee pressures still linger, a strong labor market and stable inflation level should help in improving the purchasing power of the consumer, benefiting payment companies.
Headquartered in Purchase, NY, Mastercard is a leading payment solutions company in the global payments landscape. Resilient consumer spending, enhanced services suite, improved cross-border volumes and continued expansion to new geographical areas via partnerships are expected to continue to benefit Mastercard in 2024.
MA’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 3.6%. The Zacks Consensus Estimate for Mastercard’s 2024 earnings and revenues suggests growth of 16.5% and 12.3%, respectively, from the year-ago reported figures. It has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction.
In the year-to-date period, shares of Mastercard have gained 22.6% compared with the industry’s rise of 20.6%.
Image Source: Zacks Investment Research
Based in San Francisco, CA, Visa’s growing transaction volumes, expansion of digital payments, and improvement of cross-border travel poise well for growth. Visa’s unique set of solutions, like Visa Token Service and Visa Checkout, enhance its digital platform. Numerous alliances and acquisitions expand its geographical reach and should act as a driver of growth in 2024.
Visa’s earnings surpassed estimates in each of the last four quarters, the average surprise being 5.4%. The Zacks Consensus Estimate for V’s 2024 fiscal-year earnings and revenues suggests growth of 12.9% and 9.5%, respectively, from the year-ago reported figures.
In the year-to-date period, Visa’s shares have gained 25.5% compared with the industry’s rise of 20.6%.
Image Source: Zacks Investment Research
American Express, a globally integrated payments player with headquarters in New York, will continue to benefit on the back of a number of tailwinds. AXP continues to launch innovative card offerings and upgrade the existing ones to cater to the evolving needs of its card members. Additionally, American Express pursues a series of initiatives focused on technology advancements, the introduction of secure digital solutions and assistance in businesses to regulate payments.
The bottom line of AXP beat estimates in two of the trailing four quarters, missing twice, the average surprise being 0.1%. The Zacks Consensus Estimate for American Express’ 2024 earnings and revenues suggests growth of 10.7% and 9.4%, respectively, from the year-ago reported figures. The expected long-term earnings growth rate of AXP is pegged at 14.3%, better than the industry’s average of 11.9%. It has witnessed one upward estimate revision in the past 30 days against none in the opposite direction.
Shares of American Express have rallied 27.2% in a year compared with the industry’s growth of 18%.
Image Source: Zacks Investment Research
Global Payments, a leading payments technology company, will continue to grow on the back of improving transaction volumes. Economic recovery, strong consumer spending and increased utilization of digital payment solutions poise the stock well for growth.
The bottom line of GPN beat estimates in three of the trailing four quarters, missing once, the average surprise being 1.5%. The Zacks Consensus Estimate for Global Payments’ 2024 earnings and revenues suggests growth of 13.4% and 7%, respectively, from the year-ago reported figures.
Shares of Global Payments have gained 28.8% in a year compared with the industry’s growth of 20.6%.
Image Source: Zacks Investment Research
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4 Payment Stocks Likely to Maintain Winning Streak in 2024
Resilient consumer spending, geographic expansions and improved cross-border volumes are primary drivers for companies in the payment industry. As consumers continue their transition journey toward digital methods of payments, payment processing companies stand to benefit from higher transaction volumes and improved transaction processing fees. Per Fidelity Information Service’s Global Payments Report, cash is estimated to account for less than 13% of overall payments across the globe.
Continued innovation, enhanced security of transactions and expansion initiatives should continue to benefit payment companies like Mastercard Incorporated (MA - Free Report) , Visa Inc. (V - Free Report) , American Express Company (AXP - Free Report) and Global Payments Inc. (GPN - Free Report) .
Per Mastercard Economics Institute (MEI), the year 2024 will be characterized by easing inflation and a relatively stable labor market fueling consumer spending. As inflation pressure softens across most global economies, consumers will be able to expend more, benefiting companies in the payments space. MEI expects the consumer price index, measuring inflation, to cool down to 4.9% globally in 2024 from 6% in 2023. Although this number will be higher than the pre-pandemic trend of 2.7%, consumer spending should not take a hit as signaled by improved travel-related spending post-pandemic and growth in U.S. retail sales in the 2023 holiday season amid inflationary pressures.
Companies in the payments space often resort to mergers and acquisitions strategy, reaping the benefits of diversification. Diversifying around products or geographical markets protects them from resorting to a few selected products or geographies, insulating their top line from unfavorable shocks. Visa and Mastercard undertake several opportunities to expand their geographical reach to new regions and expand business inorganically. The industry has also been undertaking significant technological investments aimed at modernizing the digital payments space.
Companies dealing with billions of transactions have the responsibility to protect data. Hence, enhanced security turns out to be an important value proposition for payment companies. With the changing landscape of digital payments, contactless payments or virtual cards are gaining popularity. Per Juniper Research, the global transaction value of contactless payments is expected to be $10 trillion by 2027. Tap to Pay and virtual cards introduced by the companies should act as a key innovation, enhancing its offerings and providing better security. Per Mastercard, virtual cards should bring in savings of 50 cents to $14 per transaction.
Amid the looming tensions in the regulatory environment of reducing swipe fees, companies have held their positions firm. Mastercard believes if the swipe fees are reduced, it will have a negative impact on small businesses and consumers. Companies in the payments space utilize the funds generated from swipe fees to enhance security measures and provide reward programs. Curtailing on such a source of revenue might impact the security of transactions, thereby impacting these companies’ core value proposition. Firms in the payments industry are also keeping up with the trends by aiming to gain from technologies like Generative AI, which would transform fraud detection measures.
Although the regulatory environment and high interchange fee pressures still linger, a strong labor market and stable inflation level should help in improving the purchasing power of the consumer, benefiting payment companies.
4 Top Stocks to Watch
Here we have picked four payment stocks that carry a Zacks Rank #3 (Hold) and have the potential to retain a purple patch going forward. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Purchase, NY, Mastercard is a leading payment solutions company in the global payments landscape. Resilient consumer spending, enhanced services suite, improved cross-border volumes and continued expansion to new geographical areas via partnerships are expected to continue to benefit Mastercard in 2024.
MA’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 3.6%. The Zacks Consensus Estimate for Mastercard’s 2024 earnings and revenues suggests growth of 16.5% and 12.3%, respectively, from the year-ago reported figures. It has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction.
In the year-to-date period, shares of Mastercard have gained 22.6% compared with the industry’s rise of 20.6%.
Image Source: Zacks Investment Research
Based in San Francisco, CA, Visa’s growing transaction volumes, expansion of digital payments, and improvement of cross-border travel poise well for growth. Visa’s unique set of solutions, like Visa Token Service and Visa Checkout, enhance its digital platform. Numerous alliances and acquisitions expand its geographical reach and should act as a driver of growth in 2024.
Visa’s earnings surpassed estimates in each of the last four quarters, the average surprise being 5.4%. The Zacks Consensus Estimate for V’s 2024 fiscal-year earnings and revenues suggests growth of 12.9% and 9.5%, respectively, from the year-ago reported figures.
In the year-to-date period, Visa’s shares have gained 25.5% compared with the industry’s rise of 20.6%.
Image Source: Zacks Investment Research
American Express, a globally integrated payments player with headquarters in New York, will continue to benefit on the back of a number of tailwinds. AXP continues to launch innovative card offerings and upgrade the existing ones to cater to the evolving needs of its card members. Additionally, American Express pursues a series of initiatives focused on technology advancements, the introduction of secure digital solutions and assistance in businesses to regulate payments.
The bottom line of AXP beat estimates in two of the trailing four quarters, missing twice, the average surprise being 0.1%. The Zacks Consensus Estimate for American Express’ 2024 earnings and revenues suggests growth of 10.7% and 9.4%, respectively, from the year-ago reported figures. The expected long-term earnings growth rate of AXP is pegged at 14.3%, better than the industry’s average of 11.9%. It has witnessed one upward estimate revision in the past 30 days against none in the opposite direction.
Shares of American Express have rallied 27.2% in a year compared with the industry’s growth of 18%.
Image Source: Zacks Investment Research
Global Payments, a leading payments technology company, will continue to grow on the back of improving transaction volumes. Economic recovery, strong consumer spending and increased utilization of digital payment solutions poise the stock well for growth.
The bottom line of GPN beat estimates in three of the trailing four quarters, missing once, the average surprise being 1.5%. The Zacks Consensus Estimate for Global Payments’ 2024 earnings and revenues suggests growth of 13.4% and 7%, respectively, from the year-ago reported figures.
Shares of Global Payments have gained 28.8% in a year compared with the industry’s growth of 20.6%.
Image Source: Zacks Investment Research