In this work, I We evaluated two credit card brands using the TipRanks comparison toolvisa (NYSE:V) and MasterCard (New York Stock Exchange: Massachusetts), to determine the right stock to buy. Upon closer analysis, both look better in the long term, but his V stock is better suited in the short term due to better technical momentum and key fundamental metrics. There is a possibility.
year to date, Visa up nearly 7%in the meantime Mastercard shares rose just 1.4%However, as you can see below, the long-term returns are very similar.
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Two companies that are essentially duopolies and offer nearly identical types of services require a closer look. However, there are other considerations. So let’s dive in.
Visa (NYSE:V)
Visa and Mastercard share prices have followed similar trajectories, but Mastercard has more than doubled over the past five years and Visa has risen 90%. However, Visa’s short-term share price momentum, strong margins and fundamentals, and slightly lower P/E ratio suggest that a bullish view is justified.
Visa trades at about 31.8x P/E compared to Mastercard’s current P/E of about 34.3x. His five-year average P/E for Visa is about 36x, suggesting near-term upside potential despite the recent rally in the stock. Additionally, Visa’s average price-to-sales (P/S) multiple is around 17.4 over the same timeframe, compared to around 15.2 today.
Both companies exhibit attractive fundamentals and are unaffected by the banking crisis, but Visa appears to be improving slightly in the short term. For example, Visa has enjoyed a high operating profit margin of 67% and a high net profit margin of 50.3% over the past 12 months. The company also posted a high free cash flow margin of 58.8% over the past 12 months.
Much bigger in terms of visas too $30.2 billion in revenue over the last 12 monthsAlso, Visa’s debt-to-equity ratio of 55.5% is far superior to Mastercard’s 232%, which could be significant in the event of a recession.
What is your target price for V shares?
Visa has a strong buy consensus rating based on 19 buy, 1 hold and 1 sell ratings assigned over the past three months. Average at $259.85 Visa’s stock price target Implying a 17.6% upside potential.
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Mastercard (NYSE:MA)
Although Visa is marginally ahead of Mastercard in some areas, Mastercard’s fundamentals are still very attractive. Additionally, Mastercard outperforms Visa in several respects, suggesting a bullish view may be appropriate here, but its higher P/E ratio gives Visa a slight edge. .
Mastercard’s P/E multiple is 34.3, with an average ratio of 43.2 since April 2018, suggesting upside potential. Moreover, its P/S multiple of 15.2x compares to the average multiple of 18x over the same timeframe. Additionally, Mastercard has an operating margin of 56.8%, a net margin of 44.7% and an attractive free cash flow margin of 48.4% over the last 12 months.
In terms of outperformance over Visa, Mastercard’s gross margin is 100%, slightly higher than Visa’s 97.6%. Additionally, Mastercard issues more credit cards than Visa, and its cards are growing much faster than Visa, at 25% compared to Visa’s 4%. However, Mastercard has a large portfolio of international credit cards, which could pose a headwind as growth may slow in some of these markets.
What is the target price for MA stock?
Mastercard has a strong buy consensus rating based on 21 buys, 2 holds and 0 sell ratings assigned in the last 3 months. Average at $423.18 Mastercard stock price target Implying a 20.35% upside potential.
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Conclusion: V and MA long-term bullish
In the long run, it’s unlikely that either Visa or Mastercard will go wrong, so they both look like long-term buy-and-holds. However, investors who can only choose one due to their portfolio size and required diversification may choose Visa in the short term.
Both have one caveat. Both stocks could face recession during a downturn, so investors may need to harden their hatches, so to speak. But even after the global financial crisis deepened, both Visa and Mastercard stocks recovered quickly.
As a result, one potential strategy for investors anticipating a recession is to wait for a more attractive entry price. Or maybe someone wants to buy stocks now and add to those positions if a recession hits.This second of his offers a more attractive entry point for Visa and Mastercard. It may be slightly better because it is not recession dependent.