Talking Numbers

Why Visa is the Apple of credit card companies: Fund manager

Talking Numbers

MasterCard may be the big story today but there are other credit card companies worth a second look?

MasterCard may be the big story today but there are other credit card companies worth a second look?

The headlines today were about MasterCard's $3.5 billion share buyback, dividend increase, and stock split. But there are three other publicly-traded major credit card companies that investors can choose from: Visa, American Express, and Discover. And, all four have significantly outperformed the S&P 500 index:

Visa MasterCard American Express Discover
Ticker V MA AXP DFS
Share price (12/11) $205.66 $790.57 $83.90 $52.68
2013 YTD returns 35.7% 60.9% 46.0% 36.7%
Market Cap $131 billion $95 billion $90 billion $25 billion
Revenues $11.8 billion $8.1 billion $30.4 billion $6.8 billion
Profit margins 42.3% 38.2% 15.4% 34.5%
Return on Equity 18.3% 42.5% 24.2% 26.0%
Net Income $4.9 billion $3.1 billion $4.6 billion $2.3 billion
Earnings per Share $7.59 $25.28 $4.23 $4.46
Forward Dividend Yield 0.8% 0.3% 1.1% 1.5%
Price to Book 4.7x 12.0x 4.8x 2.5x
Price to Forward Earnings 19.8x 25.5x 15.5x 10.4x

On CNBC's Street Signs' Talking Numbers segment, shares of two of these companies – Visa and American Express – are examined from the technicals and the fundamentals perspectives.

(Read: The rich do not pay the most taxes, they pay ALL the taxes)

"Visa has gone too far, too fast," says Jonathan Krinsky, Chief Market Technician at MKM Partners.

"Since the middle of 2011, Visa has massively outperformed American Express," says Krinsky. "And, it's really the rate of ascent that's concerning."

Krinsky notes that Visa has gained so fast that it hasn't touched its 200-day moving average in two years. His preference based on the charts comparing the two is for American Express over Visa.

However, Jason Rotman, Managing Partner at Lido Isle Advisors, has the opposite view.

"Visa reminds me of Apple in its heyday," says Rotman. "Visa has zero long-term debt. They have three times the operating margins as American Express."

"American Express has $56 billion of long-term debt," says Rotman. "They not only issue credit cards, they must be using their own a lot. They have so much debt and Visa has zero. Overall, Visa has outpaced American Express but it's for a reason."

(Watch: Stockman: Budget deal a 'joke and betrayal')

To see the Krinsky's charts on Visa versus American Express and for the rest of Rotman's analysis of the two companies, watch the video above.

More from Talking Numbers:

Why MasterCard’s stock split will make it ‘priceless’
Why heating bills may go down (and it’s not because of the weather)
Bernstein Asset Management CIO: Here’s when the Dow will hit 20k

________________

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: facebook.com/CNBCNumbers

View Comments (3)