|Bid||0.00 x 1800|
|Ask||0.00 x 1000|
|Day's Range||27.72 - 27.90|
|52 Week Range||23.10 - 30.33|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.14%|
The bitcoin price peaked in December, 2017 after an amazing, almost straight-up run for months. You can see how the price can't quite make it back above the Ichimoku cloud -- that's the technical analysis indicator derived from a comparison of the 9-day highs and lows and the 26-day highs and lows. It's one way chart readers analyze moving average dynamics.
Wells Fargo (WFC) has delivered stable profitability since the beginning of 2017 helped by rates and lower taxes in 2018. The bank has maintained high dividend yields and repurchases in order to boost return on equity (or RoE). It has relatively high capital adequacy ratios and has passed recent stress tests. However, a further hike in payouts will depend on its growth in operating performance. Amid rising rates and lower taxes, credit offtake has been weaker.
The Federal Reserve is expected to increase the Fed funds rate two more times in 2018. The yield curve is flattening, indicating a smaller difference between short-term and long-term interest rates. This has happened because the Fed has pushed for higher short-term rates with no major uptick in long-term rates. A flattening yield curve is a cause for concern, as it indicates weaker expectations from long-term equity and debt assets.
The company’s competitors Visa (V), PayPal Holdings (PYPL), and Discover Financial Services (DFS) have PEs of 25.96x, 31.78x, and 9.56x, respectively, on a next-12-month basis. Mastercard has higher valuations primarily due to the positive outlook it has for the remainder of 2018. Moving forward, Mastercard will likely be positively impacted by the rising trend in digital transactions.
The Trump administration is pushing for policy changes on multiple fronts like tax cuts, trade wars, a push for domestic manufacturing, changes in the Dodd-Frank Act, and immigration policies. Overall, the policies are directed towards improving manufacturing growth and improving operating cash flows for companies in the US. Banks (XLF) with a major domestic presence including Wells Fargo (WFC) and JPMorgan (JPM) are expected to benefit from these policies due to a boost to credit growth.
As we’ve discussed in this series, this year, Visa (V) is expected to be boosted by its business fundamentals, increased payment digitalization, and higher oil prices. Of the 36 analysts covering the payment giant’s stock, 15 (41.7%) recommend “strong buy,” 17 (47.2%) recommend “buy,” and four (11.1%) recommend “hold.”
Even though digital transactions take less time to complete, many economies still rely on cash for the execution of transactions.
Wall Street analysts have given Mastercard (MA) an average EPS estimate of $1.5 for the second quarter, reflecting a year-over-year rise.
Wells Fargo (WFC) benefited alongside other bankers from rising rates, which resulted in better rate spreads for existing loan books. The bank continues to command the highest net interest margins (or NIMs) among peers (XLF). However, rate hikes going forward aren’t expected to boost margins, and will instead put pressure on further lending due to higher interest rates.
Mastercard (MA), a company in the business of providing electronic payment solutions, reported strong numbers in the first quarter. Mastercard and its peers (XLF) Visa (V), Discover Financial Services (DFS), and American Express (AXP) benefit from strong spending trends, as they increase the number of transactions and improve the companies’ revenues. In a recent conference, Mastercard’s top management stated that the first quarter had been primarily aided by share growth as well as cross-border business.
Wells Fargo Stock Has Been Weak amid Controversy: Can It Recover? Wells Fargo (WFC) continues to see a contraction in its loan book in recent quarters mainly due to strict underwriting guidelines and repayments from existing clientele. Overall banks (XLF) are facing difficulty in expanding their loan books amid rising interest rates, which has pushed corporates to reduce leverage.
Wells Fargo (WFC) has had a flat operating performance over the past six quarters compared to the stellar performances by its industry peers (XLF) mainly due to controversies involving the fake account opening scam and the latest news about the alteration of internal records. The bank is finding it difficult to shore up its loan book amid such controversies, and its efforts to bump up its integrity through new marketing campaigns are being derailed. The stock has tanked 9.6% over the past one quarter owing to weaker performance and continued controversies surrounding employee culture.
According to the May FOMC meeting minutes, members are of the view that the US economy is continuing to grow at a moderate pace. The trend of improving economic conditions in the inter-meeting period continued at the May meeting, with FOMC members acknowledging strength in the employment market, increased household spending, and improved business investment.
While Visa’s (V) NTM (next-12-month) price-to-book ratio is 7.4x, competitors’ average is 8.0x. Peers Mastercard (MA), Discover Financial Services (DFS), and Ally Financial (ALLY) have NTM price-to-book ratios of 21.0x, 2.3x, and 0.81x, respectively.
Visa (V) is expected to post EPS (earnings per share) of $1.11 in the third fiscal quarter (ending in June), boosted by strong business fundamentals. As we’ve discussed, the performance of payment technology companies (XLF) such as Discover Financial Services (DFS), Mastercard (MA), and American Express (AXP) is affected by the overall economy and client spending.
As we’ve discussed, payment technology companies such as Visa (V), Mastercard (MA), American Express (AXP), and Discover Financial Services (DFS) benefit primarily from increased spending, which rises with economic growth. As US consumer spending is expected to rise, Visa could be due to benefit.
Previously, we discussed billionaire investor David Tepper’s largest holdings and top buys and sells in the first quarter. In this part, we’ll look at Tepper’s top investment sectors based on his Appaloosa Management holdings.
T. Rowe Price Group (TROW) generates net revenues from investment advisory fees and administrative, distribution, and servicing fees. TROW generated total investment advisory fees of ~$1.2 billion in the first quarter compared to $992.7 million in the first quarter of 2017, reflecting a YoY (year-over-year) rise of 19.8%. Of the total investment advisory fees in the first quarter, US mutual funds contributed $832.9 million while other investment products made a contribution of $356.3 million.
Bank stocks and financial sector exchange traded funds may continue to strengthen as strong fundamentals help support this market segment’s outlook. Year-to-date, the Financial Select Sector SPDR (NYSEArca: ...
At the J.P. Morgan Global Technology, Media and Communications Conference, Visa (V) shared positive views on its European integration, which it stated has been proceeding rapidly. The company has also been focusing on its push payment facility, Visa Direct. Visa’s payment volume rose substantially YoY (year-over-year) in fiscal Q2 2018, by 11% on a constant-dollar basis, which could boost its service revenue in fiscal Q3 2018.
At the J.P. Morgan Global Technology, Media and Communications Conference, Visa (V) stated it would be targeting the US market’s significant untapped opportunities, which could boost growth. By targeting small merchants and increasing its merchant base, the company could see long-term growth.
May.24 -- Steve Sosnick, Interactive Brokers chief options strategist, discusses his options strategy for the Financial Select Sector SPDR ETF with Bloomberg's Julie Hyman on "Bloomberg Markets."