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Great Early Holiday Sales Read for Best Ideas Portfolio Holdings

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On Saturday, IBM Digital Analytics Benchmark, a source for real-time cloud-based online retail data and analysis, revealed strong online retail trends for this Thanksgiving and Black Friday: US Holiday shoppers once again shopped online early for the best deals with Thanksgiving Day online sales increasing by 19.7 percent over 2012. This momentum set the stage for a record Black Friday, with online sales growing 18.9 percent over the same period last year. The biggest surge came from mobile sales increasing to 25.8 percent of total online sales for Thanksgiving and 21.8 percent for Black Friday as consumers went from the dinner table to their tablets to lock in the best offers. In addition, IBM reported that New York City consumers … Read more

E-commerce Exposure Still Makes Sense

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The Census Bureau of the Department of Commerce reported Friday that it estimates US retail e-commerce sales for the third quarter, adjusted for seasonal variation, came in at 17.5% (+/- 5.8%) versus the same period a year ago. On an adjusted basis, US retail e-commerce sales, as a percent of total quarterly retail sales, have advanced to nearly 6%, up from just 2% at the beginning of 2004 (shown in image below). Both the rapid pace of US retail e-commerce sales expansion and the trend toward more transactions being completed online show no signs of slowing. Image Source: US Department of Commerce The positive data follows comScore’s (SCOR) report, released earlier this month, of a 13% increase in US desktop-based … Read more

Visa and MasterCard Gushing with Cash

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Best Ideas Newsletter portfolio holding Visa (V) and its rival MasterCard (MA) reported results for their respective calendar third quarters. Visa’s top-line continues to expand, growing 8.8% year-over-year during its fiscal year 2013 fourth quarter to $2.9 billion, a tad shy of consensus estimates on nearly $1.1 trillion in gross dollar volume. The combination of the firm inking more major deals than usual (which increased incentives) and foreign exchange effects lowered reported revenue growth by 1.5 percentage points. Visa’s net income per share jumped 20% year-over-year to $1.85, in-line with consensus estimates. For the fiscal year, earnings per share soared 23% year-over-year to $7.59. Free cash flow, adjusted for some timing issues related to the merchants opting out of the … Read more

The Fed Fights Back for Visa and MasterCard

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Wednesday afternoon, shares of Best Ideas Newsletter portfolio holding Visa (click ticker for report: ) recovered modestly on news that the Federal Reserve will appeal US District Court Judge Richard Leon’s ruling that the current cap on debit card transactions of $0.21 was inconsistent with the intent of the Durbin Amendment. Between now and the appeal, it seems likely that debit card caps will remain at $0.21 per transaction. Bad Idea from the Start? Because Visa and rival MasterCard (click ticker for report: ) have often been the target of regulatory scrutiny, it seems unlikely that any government-affiliated organization would show support. However, we think the Fed is well-aware of the unintended consequences of the debit card transaction fee cap. … Read more

Regulatory Uncertainty Once Again Strikes Visa and MasterCard

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The past few weeks had been very good for network processors Visa (click ticker for report: ) and MasterCard (click ticker for report: ). Visa kicked things off with strong revenue and even stronger earnings growth for its third quarter. MasterCard followed suit, easily beating consensus expectations on 15% revenue growth and a 23% surge in earnings per share. Then another bullet was fired in the war the US is fighting to regulate the amount of profit these firms can make. A US District Judge Richard Leon ruled that the Federal Reserve didn’t have the authority to cap debit card transactions at $0.21 based on the notion that the limit diverged from the original intent of Dodd-Frank’s Durbin amendment.  For … Read more

Best Idea Visa Blows Past Expectations

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Wednesday after the market close, Best Ideas Newsletter portfolio holding Visa (click ticker for report: ) reported wonderful results for its fiscal year 2013 third quarter. Revenue surged 17% year-over-year to $3 billion, easily exceeding consensus estimates. Earnings-per-share growth was even better, jumping 20% year-over-year to $1.88, well above consensus expectations. Excluding accrued litigation expenses, free cash flow is running at about $5 billion year-to-date, equivalent to an amazing 57% of revenue. Few companies are able to match Visa in terms of converting revenue into cash for shareholders. Image Source: V 3Q FY2013 Investor Presentation Visa continues to ride the secular trend in credit payments to strong payment volume growth. Total payments processed increased 11% year-over-year to $1.09 trillion, driven … Read more

Visa’s Second Quarter Was Fantastic

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Credit and debit payment network provider Visa (click ticker for report: ) announced fantastic second-quarter results Wednesday afternoon. Revenue for the quarter jumped 15% year-over-year to $3 billion, easily exceeding consensus estimates. Earnings per share, adjusted for a one-time tax benefit during the second quarter of the prior year, increased 20% year-over-year to $1.92. Due to litigation expenses, free cash flow does not look great year-to-date, but management is confident the company can generate $6 billion in free cash flow for the full-year. Considerable focus on the call addressed the company’s new exclusive card branding with JP Morgan’s (click ticker for report: ) credit unit—not surprising given CEO Charlie Scharf’s previous position as Chase’s retail financial services chief. The deal … Read more

The E-Commerce War Between eBay and Amazon Heats Up

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In order to help drive more sellers on to its platform, Best Ideas Newsletter holding eBay (click ticker for report: ) announced new, less complicated fee structures. The firm already charged lower fees than Amazon (click ticker for report: ), but the new structure gives greater transparency to sellers. The move is very positive, in our view, as we think it can help drive a stronger network of fixed price sellers to eBay. After becoming associated with auctions since its inception, eBay is in the process of becoming a destination for buyers of everything, much like Amazon has done successfully over the past several years. While Amazon may look slightly more attractive in the near-term because more buyers are on … Read more

Best Idea Portfolio Holding Visa Is Off to a Fantastic Start in 2013

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Best Ideas Newsletter holding Visa (click ticker for report: ) announced stellar results for its fiscal year 2013 first quarter Wednesday afternoon. Revenue jumped 12% year-over-year to $2.8 billion, in line with consensus estimates. Earnings per share, net of a one-time tax benefit of $0.11, increased 22% year-over-year to $1.82 per share, a few cents higher than the consensus expected. Other than a litigation charge of $4.4 billion that the firm had to pay out during the first quarter, new CEO Charlie Scharf’s first quarter on the job went off without a hitch. Payments volume increased across all geographies, growing 3% year-over-year in the US to $544 billion, 13% (excluding currency) in Asia-Pacific to $313 billion, and 37% (excluding currency) in Central … Read more