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Running Point and its chief investment officer, Michael Ashley Schulman, CFA were quoted by Reuters — this afternoon in an article by Manya Saini, “Visa profit beats estimates on post-pandemic travel boost” — regarding Visa’s just reported third quarter of 2023 earnings and revenue and their initial projections for 2024.
Spend is up
Visa handily beat analyst earnings estimates and reported a strong quarter based on still high inflation (which means people have to pay more for everything) and solid employment levels (which leads to more spending in general), as well as a busy summer season of leisure-travel and a pickup in business-travel and conferences where nearly everything is paid for with credit card. Nevertheless, the benefits of inflation, rising interest rates, and international travel are fading. Also, the market expected Visa to report a nearly 11% year-over-year rise in total transactions—that was the target for them to beat—and transactions were only up 10%, so that along with higher than expected operating expenses, up 13% year-over-year, may cause some investor reticence.
Looking into the future: wars, recession, interest rates?
The introduction of Visa’s 2024 fiscal year earnings guidance should be investors’ primary focus. Unfortunately, many analysts already have a recession baked into their 2024 forecasts and thus may be lukewarm on consumer strength. But the big variable to contend with beside recession is whether war in the Middle East escalates to involve other nations and U.S. travel warnings increase — that would put a huge damper on international travel and depress a huge revenue driver for Visa and other cards.
Visa’s plans to buy back up to $25 billion of shares, approximately 5% of their market capitalization, and raise their quarterly dividend from 45 cents per share to 52 cents are strong positives for the stock!
Article quote is below:
“Consumer spending should remain resilient especially through the holiday season because unemployment levels remain low and wages continue to grow,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
Procrastination is like a credit card: it’s a lot of fun until you get the bill.
Christopher Parker, English actor and T.V. presenter
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-107
