[ad_1]
Mastercard MA and Visa V shares have rallied nicely off their October lows after both slightly beat Q3 earnings expectations. At the moment, Mastercard stock is only 9% off its 52-week highs and Visa is trading 7% from its highs.
Let’s see if a continued rebound is in the cards and check if investors should consider buying either of the stocks.
Recent & Historical Performance
Shares of both Visa and Mastercard are virtually flat YTD Vs. the S&P 500’s -16%. In the last three months, Mastercard has risen +12% and Visa is up +10% to impressively outperform the benchmark.
Image Source: Zacks Investment Research
Hopes of a continued rebound are supported by both stocks’ historical performance. Over the last decade, Mastercard’s total return is +702% to beat Visa’s +527%. Both stocks largely outperformed the benchmark’s +258% during this period.
Pivoting to valuation will give a better idea if the recent rally in these equities can be sustained and possibly provide investors with the stellar returns seen over the last decade.
Image Source: Zacks Investment Research
Valuation
Visa has a “B” grade for Value in Zacks Style Scores system with Mastercard at a “C”.
Visa stock currently trades at 26.1X forward earnings, and nicely below the decade-high of 44.1X. This is also beneath the median of 27.7X during this period.
On the contrary, MA shares trade at a 34X forward earnings multiple, just above its decade median of 29.5X. However, this is beneath its decade-long high of 55.2X.
Image Source: Zacks Investment Research
While Mastercard shares have enjoyed better price performance, Visa stock appears to offer a slightly better discount. The price-to-earnings valuation of both companies indicates there could be more upside in the stocks.
Growth Estimates
Turning to growth will help justify a further rebound. Visa’s current fiscal year 2023 earnings and revenue are forecasted to climb 10% and 9%, respectively.
Image Source: Zacks Investment Research
Mastercard’s earnings are projected to jump 26% in FY22 with sales expected to rise 17% as shown in the charts below.
Image Source: Zacks Investment Research
Both companies continue to have solid growth trajectories. However, it’s important to note that Visa and Mastercard’s earnings estimate revisions have slightly trended down over the last 90 days.
Bottom Line
Visa (V) and Mastercard (MA) both land a Zacks Rank #3 (Hold) at the moment. It may be worth holding on to shares as both stocks trade attractively relative to their past. Top and Bottom line growth are poised to continue at both financial services firms despite earnings estimate revisions slightly down from last quarter.
These stocks also offer modest dividends to reward patient investors. Choosing between the two may come down to which stock suits investors’ portfolio strategy. Mastercard’s performance and growth trump Visa, while Visa’s stock appears to have the edge in valuation.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Mastercard Incorporated (MA) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
[ad_2]
Image and article originally from www.nasdaq.com. Read the original article here.