Wednesday, January 29, 2014
Credit Card Companies, Which one is the Best
If you have followed the major credit card companies profiles than you already know Mastercard and Visa have made decent strides since their IPO's a few years back, Visa more so than Mastercard. But comparing them in today's market and including American Express, which one is the best investment going forward? If we look at the earnings they all look positive and healthy among all three, although when you compare earnings per share Mastercard jumps ahead at over $25.00 per share compared to $7.47 (V) and $4.92 (AXP). Dividends are all close with American Express winning slightly with a little over 1% of the share price annually. AXP also takes the P/E ratio with the lowest at 17.6 which points to it being the most "valuable" of the three. We can continue to compare statistics without any one of the three jumping off the page in comparison so ultimately it comes down to opinion. I believe investing in any one of the three is a solid investment and will reap rewards in the future. The charts for all three are headed north with no slowing down in sight. If I had to pick one of them it would be American Express. The fact that it has the lowest price to earnings ratio as well as the overall business model of AXP just makes it the favorite in my eyes. American Express generally focuses on higher earning customers, which almost always translates into less bad debt as their customers are better in a position to make the payments. Not that Visa or Mastercard would be a bad investment decision and I'm sure someone could make arguments as to favor either one of them. Anyone have any thoughts? Which one do you see pulling ahead of the others?