Market Overview

JJ Kinahan Sees Consumer Confidence For Credit Card Companies

JJ Kinahan Sees Consumer Confidence For Credit Card Companies

Even as American Express Company (NYSE: AXP) rolled out strong quarterly results, an analyst oozed optimism about credit card companies. This should bode well for the quarterly results of Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA).

Visa is due to release its fiscal year second quarter results after the market close on April 20 and Mastercard would report its fiscal first quarter results before the markets open on May 2.

Kinahan's Optimism

Following American Express' blowout results, JJ Kinahan, the chief market strategist at TD Ameritrade, told Benzinga he views the credit card companies as interesting.

"Everybody has been writing about the demise of American Express recently. I'm interested to see what they say the rest of the year, if they think this pace can continue," Kinahan said.

American Express Strides Past Estimates

For the backdrop, American Express reported after the market close on Wednesday, first-quarter net income of $1.34 per share. The metric, although representing a 8 percent drop year-over-year, was way ahead of the $1.28 per share the Street was bracing for.

Revenues, net of interest expense, fell 2 percent to $7.9 billion, and yet were ahead of the $7.74 billion consensus estimate.

Among the segment's, U.S. consumer services saw a 32 percent decline in net income, although much of the downside was due to the absence of Costco Wholesale Corporation (NASDAQ: COST)-related revenues and expenses. Global Commercial Services segment revenues also fell, dropping 14 percent, while the International Consumer and Network Services and Global Merchant Services saw 16 percent and 2 percent increases, respectively in net income.

Consumer Confidence, The Catalyst

"I would expect the credit card companies did well in the first quarter because of strong consumer confidence," Kinahan offered as an explanation for the solid first quarter showing by American Express.

He might not be way off the mark, given the outperformance of recent consumer confidence readings.

The Conference Board's monthly consumer confidence survey for March showed that consumer confidence index rose 9.5 points to 125.6 in January, with an assessment of the present situation as well expectations supporting the upside. The headline index is now at the highest levels since December 2000.

In pre-market trading, shares of American Express were up 0.70 percent at $89.75.

Spencer Israel contributed to this article.

Related Links:

Visa Now BMO's Top Pick In Fintech

RBC Upgrades MasterCard To Top Pick, Sees 23% Upside


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