Credit Card Company Weekly Notes – American Express, Visa, Discover Financial

-20.73%
Downside
221
Market
175
Trefis
AXP: American Express Company logo
AXP
American Express Company

Credit card company stocks, including American Express (NYSE:AXP), Visa (NYSE:V) and Discover Financial (NYSE:DFS), traded in positive territory during the week ended September 19. Below we look at the performance of these companies for the week gone by.

American Express

AmEx’s U.S. Small Merchants Group partnered with several retail startups – BirchBox, Bonobos and Rent the Runway – for a two day event involving a thought leadership panel and a shopping event. The objective of the event was to highlight innovations in e-commerce and how those have been successfully brought into the physical world. AmEx aims to bring expertise from industry leaders and seasoned entrepreneurs to small merchants by organizing such events. [1]

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This past week AmEx’s stock increased slightly; we have a price estimate of $104 for the company’s stock, translating into a valuation of $109 billion.

The company had $33 billion in revenues in 2013, and in the first half of 2014 revenues have been above $17.5 billion. We forecast the company to end the year with over $35 billion in revenues.

See our complete analysis of AmEx’s stock here

Visa

Visa announced that it would review its 5.5% holding in British mobile payment company Monitise. Visa in 2009 entered into a commercial alliance with Monitise and also invested in the company. Monitise will be providing its mobile payments platform to Visa through 2016, as per the original agreement. Visa has hired J.P. Morgan (NYSE:JPM)) to explore options that can be exercised with regard to the investment.  [2]

We have a price estimate of $217 for Visa’s stock, which is in line with the current market price of $216. Visa’s stock was largely flat in the previous week. Our valuation for Visa implies a market cap of $166 billion.

See our full analysis of Visa here

Discover Financial Services

Discover reported monthly credit card charge-off rates and delinquency rates for the twelve months ended August 31. On a monthly basis over the period, Discover’s net principal charge-off rate (the percentage of loans considered nonredeemable) had a median of 2.2%, ranging between 1.9-2.5%. The delinquency rate (30 day period) was steady at 1.7% for most months, varying by only 0.1% in a few months over the twelve month period. [3]

Discover’s stock was up slightly last week. We have a price estimate of $64 for the company’s stock, translating into a valuation of nearly $30 billion. Our EPS estimate of $5.07 for the company is slightly lower than the consensus EPS of $5.32 for 2014. We expect the company to report approximately $8.5 billion in revenues in 2014, around 3% higher than in the previous year.

See our complete analysis of Discover Financial here

Notes:
  1. American Express Partners with Birchbox, Bonobos and Rent the Runway to Launch Inaugural “Online’s Day Off”, American Express Press Release []
  2. Visa to Undertake Assessment of Stake in Monitise, Visa Press Release []
  3. SEC 8-K Filing []