Monday, November 2, 2015

Update V & PYPL

Visa reported earnings today and announced they will acquire Visa Europe.  You can find the press release here. I'm not terribly excited about the acquisition.  I think at a time when currency headwinds from the strong dollar are hitting sales it does not seem prudent to increase your risk in that area. Plus the company noted about 37% of the European economy was still transacting via cash & check. I'm fairly confident Visa will not gobble up the remaining 37%. That doesn't leave a considerable amount of room for growth at this point in my opinion  Also with the civil unrest caused by the current immigration issues it seems the European economy will not exactly be smooth the next few years. Either way we think "long haul" here so hopefully this will be very good for the stock in the future.  Here is what the CEO had to say on the earnings release.

“Visa’s fiscal fourth quarter was a strong finish to an equally strong fiscal full-year 2015 in terms of revenue and earnings per share growth in the face of a continued challenging global economic environment. The underlying growth of our franchise continued as evidenced by our strong payments volumes as well as new and renewed partnerships during the year. Most importantly, we continued to build our capabilities at the physical point-of-sale as well as in the digital space,” said Charlie Scharf, Chief Executive Officer of Visa Inc. “Although fiscal 2016 reported growth rates will be negatively impacted by a strong US dollar and an uneven global economy, we are well positioned for strong success in 2017 and well beyond.” 

Paypal also issued results last week. The stock had dropped initially but has climbed its way back up since then.  Growth is much stronger at PYPL than V right now. This was PYPL's first report since separating from Ebay. Here is what the CEO had to say.

“PayPal is entirely focused on digital payments and transforming money for people around the world. This clear focus and our strong value proposition allowed us to deliver strong financial results in the third quarter,” said Dan Schulman, President and CEO of PayPal. “We are operating in a time when change is sweeping through the financial services industry driven by the rise of mobile technology and the acceleration of money becoming digital. These two massive trends play directly to our strengths and we are leveraging this transformation to extend and accelerate our lead.”

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