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4 Payments Stocks Poised for Earnings Beat in June Quarter

Sapna Bagaria

The payments industry has been one of the beneficiaries of the COVID-19 pandemic as it led to a rise in digital payments.

Since the outbreak prompted people to avoid physical contacts, the online mode of payments gained a huge prominence. Notably, the payments industry has already been shifting to electronic mode over the recent years, given the proliferation of technology. However, the ongoing coronavirus episode may slow down this transition.

Though the rampant health crisis weighed on businesses across various industries due to a meltdown in demand and supply glitches, one industry that earned a sweet spot amid this crisis is the payments space.

Though payments on account of travel and other discretionary spending took a hit, customers loosened the purse strings more on daily essentials as demand for home-improvement needs and the cook-at-home wave saw a sharp jump. Most payments were made online, involving modes like cards (both debit and credit), mobile or bank accounts. Thus companies that process such payments and provide a payment network greatly benefited from this trend.

Optimistic Data

Per a regulatory filing, Visa Inc. V management informed that in May, total U.S. payments volume declined 5% year over year, marking a 13% improvement from April reading. Debit grew 12% while credit plunged 21% year over year in May, reflecting a respective improvement of 17% and 9% from April-levels.

The continued distribution of Economic Impact Payments and the relaxing of shelter-in-place restrictions in a number of states drove the above trends. Also, international markets are at various stages of reopening and recovery, which in turn, are likely to have supported cross-border volumes in the June quarter.

Mastercard Inc. MA recently reported that ever since the pandemic has struck, nearly half (46%) of respondents in the Asia Pacific region have been using cash less frequently while two-thirds of Latin American consumers confirm that they are either resorting to minimal usage of cash or no physical money at all. In Europe, which already had the largest adoption of contactless payments compared to any given place, 64% say tap and pay is now their preferred way to pay in store.

Also, the report pointed out a steep surge in US e-commerce spending soaring 93% year over year in May. In April and May combined, e-commerce as a share of total retail salesreached 33% in the United Kingdom, hitting an unprecedented high (ex. auto, petrol and restaurants).

Picking Winners

We selected some payment stocks that are well-positioned to beat on earnings in their upcoming releases.

Choosing stocks with an earnings beat potential might be a difficult task unless one knows the process of shortlisting. One way to do this is by choosing stocks that have the winning combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is our proprietary methodology for identifying stocks that have maximum chances (as high as 70%) of pulling off a positive surprise in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Payment Bets With Earnings Prospects

Here are five payment stocks that have the right combination of elements to deliver a positive earnings surprise in their upcoming announcements:

Visa facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit cards and prepaid cards.
It currently has an Earnings ESP of +8.91% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Global Payments Inc. GPN is a leading worldwide provider of payment technology and software solutions catering innovative services to our customers globally.
It currently has an Earnings ESP of +5.86% and a Zacks Rank of 3.

Mastercard is a leading global payment solutions company that provides an array of services in support of credit, debit, mobile, web-based and contactless payments plus other related electronic payment programs to financial institutions and other entities.
Mastercard has an Earnings ESP of +2.7% and is Zacks #3 Ranked at present.

International Money Express, Inc. IMXI offers wire transfer and other processing services to customers through network of sending and paying agents located primarily in the District of Columbia and Puerto Rico as well as across Latin America.

It has an Earnings ESP of +2.44% and a Zacks Rank #2.


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Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock Analysis Report
 
Global Payments Inc. (GPN) : Free Stock Analysis Report
 
INTERNATIONAL MONEY EXPRESS, INC. (IMXI) : Free Stock Analysis Report
 
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