American Express Company (AXP), Mastercard Inc (MA), Visa Inc (V): This Selloff Has Eager Investors Eyeing Fresh Entry Points

American Express posted good results in the first-quarter of 2013. 50% of its revenue comes from the American market. The company’s U.S. business division recorded a 5% growth in revenue. The improved macroeconomic conditions and better consumer sentiments will likely help American Express continue with its impressive performance. The company is expanding its international business and has teamed up with several financial institutions to issue third-party card in these countries.

Ratio analysis

Visa Inc (NYSE:V) is trading at a premium with respect to its two peers. Investors therefore believe that the company’s future prospects are considerably better. Visa’s huge lead in global market share as well as its future business strategies that encompass developments such as expanding its foothold in emerging markets, where the shift from cash to electronic payments in a lot of developing countries as well as mobile banking and e-commerce growth, will all provide some lift to the card giant.

Conclusion

Heavy reliance on debit cards for its revenue is the biggest reason why Visa Inc (NYSE:V) was more hurt by the debit card court ruling.

Visa might be down, but it most definitely is not out. It is highly unlikely that either Visa or MasterCard will suffer economically from any changes in the current interchange cap. Major banks will probably try to renegotiate their fees since they seem to have an uncanny ability to make up for lost revenue by any means possible.

Despite this, it is hardly likely that they will be willing to strain their delicate relationships with card purveyors such as Visa and Mastercard Inc (NYSE:MA). Once investors fully digest the real meaning of the historic ruling, Visa shares are likely to rebound strongly. Visa returned impressive second-quarter results and is likely to continue with this trend in the coming quarters. The unfortunate blip cannot hold the credit card giant down for long.

The article Visa Selloff Has Eager Investors Eyeing Fresh Entry Points originally appeared on Fool.com and is written by Boniface Murigu.

Boniface Murigu has no position in any stocks mentioned. The Motley Fool recommends MasterCard and Visa. The Motley Fool owns shares of MasterCard. Boniface is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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