American Express (AXP), Visa (V), and MasterCard (MA) are scheduled to report quarterly results on April 18, 24, and 30, respectively. What to watch for: 1. OUTLOOKS: During the company’s last earnings call, American Express said it sees 2019 earnings per share between $7.85-$8.35 and revenue growth up 8%-10%. Earlier this month, American Express reaffirmed 2019 adjusted earnings per share view and said the company and Delta Air Lines (DAL) have signed an 11-year renewal extending their exclusive Delta SkyMiles Credit Cards from American Express portfolio through the end of 2029. American Express expects attractive growth economics over the term of the agreement. Back in January, Visa backed its 2019 net revenue growth view of low double digits and said it still sees 2019 client incentives as a percentage of gross revenues in the 22%-23% range. Additionally, the company sees annual class A earnings per share growth in high teens on GAAP nominal dollar basis and mid-teens on adjusted basis. Meanwhile, MasterCard said it sees 2019-2021 earnings per share CAGR in the “high-teens” and net revenue CAGR in the “low-teens.” 2. APPLE CARD: On March 25, Apple (AAPL) announced the Apple Card, which the company describes as “an innovative, new kind of credit card created by Apple and designed to help customers lead a healthier financial life. Apple is partnering with Goldman Sachs (GS) and Mastercard to provide the support of an issuing bank and global payments network. “As a newcomer to consumer financial services, Goldman Sachs is creating a different credit card experience centered around the customer, which includes never sharing or selling data to third parties for marketing and advertising. Mastercard will provide cardholders the ability to shop at merchants around the globe,” Apple said. Apple Card will be available to qualified customers in the U.S. this summer. 3. NOT ACCEPTING VISA CREDIT CARDS: Last month, Kroger (KR) announced that its Smith’s Food & Drug Stores division will be the company’s second banner to stop accepting Visa credit cards as a form of payment. Smith’s will continue to accept all other forms of payment. The company said in a statement that, “The excessive interchange and network fees that Visa and its issuing banks charge retailers drive up food prices for all customers. Visa’s fees are the highest of any credit cards accepted in Smith’s and exceed grocery store margins in the highly competitive food retail industry.” Smith’s stores will continue to accept all other forms of payment, including major credit cards such as MasterCard, Discover (DFS), and American Express; cash and checks; electronic benefit transfer cards from SNAP and WIC programs; and MasterCard and Visa debit cards both with and without PIN and health savings account cards. 4. CHINA PROSPECTS: Meanwhile, Loop Capital analyst Joseph Vafi speculated that the U.S.-China trade deal could be a positive for MasterCard and Visa, neither of which has any “material” operations in China at this time, by resolving the countries’ intellectual property dispute. The analyst noted that Chinese negotiators appear to be “somewhat willing” to negotiate the IP issue, and a concession allowing U.S. firms to operate on the mainland without a local partner could “grease the skids for eventual approval of domestic business licenses” for payment networks. Vafi reiterated a Buy rating on both MasterCard and Visa, with unchanged price targets of $232 and $157, respectively.
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