Visa vs. AmEx: Which Payment Giant is the Better Pick Post-Earnings?

Core Insights - Visa Inc. and American Express Company both reported strong earnings, but their growth drivers are diverging, necessitating a deeper analysis beyond headline figures to assess future momentum [1][9] Group 1: Earnings Performance - Visa reported Q4 fiscal 2025 EPS of $2.98, exceeding estimates by $0.01 and reflecting a 10% year-over-year increase, driven by robust transaction processing and payment volume growth [4] - American Express delivered Q3 fiscal 2025 EPS of $4.14, surpassing estimates by 4.6% and showing a 19% year-over-year increase, supported by strong spending from its premium customer base [6] Group 2: Key Operational Drivers - Visa's payment volume increased by 9% year-over-year, with processed transactions reaching 67.7 billion, a 10% rise, and cross-border volume growing by 12% [5] - American Express's network volumes reached $479.2 billion, a 9% year-over-year increase, with total interest income rising 8% to $6.6 billion [7] Group 3: Financial Outlook - Visa anticipates low double-digit revenue growth for fiscal 2026, with EPS expected to grow by 11.7% to $12.81 [8] - American Express expects revenue growth between 9% and 10% for 2025, with EPS projected in the range of $15.20 to $15.50, indicating a 15.3% increase [9][10] Group 4: Financial Flexibility - Visa ended the quarter with $17.2 billion in cash, a significant increase from $12 billion, and reduced long-term debt to $19.6 billion [11] - American Express reported $54.7 billion in cash, up from $40.6 billion, but long-term debt increased to $57.8 billion [12] Group 5: Shareholder Returns - Visa returned $6.1 billion to shareholders, with $4.9 billion in buybacks and $1.2 billion in dividends, maintaining a dividend yield of 0.83% [14] - American Express repurchased 7 million shares for $2.3 billion and paid $600 million in dividends, with a dividend yield of 0.96% [14] Group 6: Valuation and Price Performance - Visa shares have declined 6.6% over the past three months, trading at 24.62X, below its five-year median of 26.66X, suggesting potential valuation upside [16][19] - American Express trades at 19.70X, above its five-year median of 17.27X, indicating differing risk perspectives [19] Group 7: Conclusion - Visa's global scale, cleaner balance sheet, and steadier growth position it for more durable upside compared to American Express, despite both companies holding a Zacks Rank 3 (Hold) [23]