SOURCE: Five Star Equities

Five Star Equities

February 08, 2013 08:20 ET

Credit Companies Look to Benefit as Consumer Sentiment on the Rise Heading Into the New Year

Five Star Equities Provides Stock Research on Mastercard and Visa

NEW YORK, NY--(Marketwire - Feb 8, 2013) - Credit card stocks have provided investors with strong gains in 2012 as the U.S. economy continued to show signs of improvement. The Federal Reserve recently reported that consumer borrowing rose to the highest level on record in December. Five Star Equities examines the outlook for companies in the Credit Services Industry and provides equity research on Mastercard Inc. (NYSE: MA) and Visa Inc. (NYSE: V).

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Consumer borrowing rose for the fifth consecutive month with a $14.6 billion gain in December. The increase was largely due to a sharp rise in in student and auto loans, which posted its largest gain since November 2001. Consumer confidence has trended upwards heading into the New Year as the Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly increased to 73.8 in January. A median forecast of 62 economists had predicted the index to fall to 71.5, according to Bloomberg.

"As consumers are willing to take on additional debt, that's a good sign that economic growth is beginning to turn around," said Andrew Brodsky, an economist with Stone & McCarthy Research Associates. "The gains are definitely encouraging."

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Mastercard reported net revenues in the fourth quarter of 2012 increase 10 percent year-over-year to $1.9 billion. The company's Board of Directors has recently decided to increase its quarterly dividend from $0.30 per share to $0.60 per share, and have approved a new share repurchase program for up to $2 billion. "Our strong financial performance allows us to increase the return of cash to shareholders through our dividend and share repurchase programs." said company President and CEO Ajay Banga.

Visa reported a net income of $1.3 billion for the fiscal first quarter 2013, an increase of 26 percent when compared to the $1.03 billion posted in the year ago quarter. In October, the company raised its quarter dividend by 50 percent to $0.33 per share. The company's Board of Directors has also authorized a new $1.75 billion Class A share repurchase program.

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