Both Mastercard and Visa cards are widely accepted around the world, however Costco does not currently accept Mastercard when shopping in-store. While Visa and Mastercard are not card issuers, other networks like American Express and Discover are. As American Express operates more like a bank than a fintech company, it is a bit more complex to understand.

They were my five (out of eight fintech stocks) and this was my number six just because they’re slightly smaller company which generally means a little bit more growth potential. Mastercard has been a little bit more aggressive when it comes to embracing new technologies, and like Jason said, that person-to-person and business-to-business payments. Staying with ratio’s I also look at a company’s total cash and short-term investments to their total long-term debt. A lot of people don’t look at this but I feel more comfortable if a company has more on hand liquidity than their long-term debt or at least a large percentage.

Are Mastercard (MA) and Visa (V) Stock Buys Right Now?

But the U.S.’s (and Canada’s) credit and debit card market is pretty well saturated. Federal Reserve Bank reports that 77% of all adults living in the U.S. own a credit card, while 93% hold a debit card. Mastercard’s top esg stocks P/E multiple stands at 34.3, versus its mean ratio of 43.2 since April 2018, suggesting more room for upside. Further, its P/S multiple of 15.2 times compares to its mean multiple of 18 times over the same timeframe.

I think that Visa is the better buy because of its larger exposure to debit card transactions and the US market, on top on the fact that it is cheaper than Mastercard. It’s extremely hard to judge a company’s prospects based solely on its plans that rest on its current innovative announcements. Still, I would have to give Visa an edge on this criterion due to their Visa Eco Benefits program. Judging by these metrics alone, although Visa is currently more profitable than Mastercard, the earnings growth of Mastercard should be considered when making an investment decision. Mastercard is the smaller of the two entities and has a lot more room to grow in the industry, which it certainly seems to be doing.

Nimesh Jaiswal’s fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Consumer Financial Services industry here. MA’s net revenue increased 30% year-over-year to $5 billion for the third quarter ended September 30, 2021. The company’s adjusted net income increased 46% year-over-year to $2.30 billion.

That’s a significant shift from 2014’s breakdown when 40% of payments involved cash and 42% of them were done with a card. And this shift away from cash and toward cards is still in motion. Visa is of course the United States’ and the world’s biggest credit TD Ameritrade card processing platform. Those transactions generated $3.8 trillion worth of commerce and translated into $8.1 billion in revenue for Visa during the three-month stretch ending in June. The transactions were up 10% year over year and revenue was up 12%.

That’s right — they think these 10 stocks are even better buys. As far as analysts are concerned, you can take your pick between Visa and Mastercard. Both are expected to continue growing EPS in the double digits. Those estimated increases in EPS are significant in that they underline the relatively high valuations for shares of Visa and Mastercard, which you can see below. To put those market caps in perspective, Visa is the 12th-largest company in the S&P 500 Index by this measure, while Mastercard is the 13th largest.

Generous perks and benefits

For example, Mastercard offers Standard, World Mastercard, and World Elite Mastercard products. Meanwhile, Visa credit cards can be Visa Traditional cards, Visa Signature credit cards, or Visa Infinite cards. Both Mastercard and Visa offer credit cards that come with a range of important benefits and consumer protections.

Investment Thesis

MA’s ratio was 88.13% ($10.60B / $12.02B) as almost all their long-term debt is covered by their on-hand liquidity. V is estimated to increased its revenue by a CAGR of 13.5% over the next five years. Therefore, both companies are expected to post higher revenue growth moving forward.

Who has more growth potential?

Total equity and growth are a big factor for me because this shows the value of the company after the liabilities are canceled out from its assets. In 2020 V’s total equity was $36.21 billion which was an increase Highest net worth company of $6.37 billion (21.34%) over the past 5-years and $3.45 billion (10.53%) over the past 3-years. V has had an average annual growth rate of 4% over the past 5-years and 3.4% over the past 3-years.

According to the company, “No card is more accepted around the world”, and their claim might be true. Mastercard is currently accepted in more than 210 countries and territories, while Visa says its cards are accepted in over 200. Visa’s brand promise is “everywhere you want to be”, meaning you can hypothetically use a Visa card anywhere in the world. However, like many networks, Visa cards can’t be used in U.S.-sanctioned countries, including Iran, North Korea, Syria and Russia.

I am going to split the point and even though V’s ratio is larger by 6.98% more than 88% of MA’s debt is covered by their cash and short-term investments on hand. I have never seen gross profit margins so high as V had a 96.67% gross profit margin and MA had a 100% gross profit margin in 2020. There isn’t much to discuss and even though the numbers are very close and the best ratios I have seen I am giving MA the point. The Motley Fool has positions in and recommends Mastercard and Visa.

Although Visa beats Mastercard slightly in some areas, Mastercard’s fundamentals are still extraordinarily attractive. Additionally, Mastercard does outperform Visa in some ways, suggesting a bullish view may also be appropriate here, although its higher P/E ratio gives Visa a slight advantage. That means they are not lenders, and they don’t have to maintain large capital cushions to protect against credit losses, as banks do. However, readers can glean that the recovery is gaining momentum. The pace is also largely in line with the recovery in travel spending. We also highlighted the recovery in our recent Airbnb (ABNB) and Expedia (EXPE) article.

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