On The Fly: What to watch in credit card space earnings reports

American Express (AXP), Visa (V) and MasterCard (MA) are scheduled to report quarterly results on October 18, 25 and 31, respectively. What to watch for: 1. OUTLOOK: During the company's last earnings call, American Express backed its 2017 EPS view $5.60-$5.80. Meanwhile, Visa raised its 2017 net revenue growth view to roughly 20% from 16%-18% back in July when the company reported quarterly results, and said it sees 2017 class A common stock EPS growth in low digits on a GAAP nominal dollar basis and approximately 20% on an adjusted, non-GAAP nominal dollar basis. The company also backed its 2017 operating margin view in the mid-60s. On September 7, MasterCard raised its 2017 revenue growth view to high end of low-double digits, and said it still sees 2017 operating expenses, on a currency-neutral basis, excluding the impact of acquisitions and special items, to be up by a high-single digit percentage. The company also raised its net revenue compound annual growth rate view for 2016-2018 to high end of low double-digits on a currency-neutral basis, excluding the impact of acquisitions, and raised its 2016-2018 EPS CAGR view to about 20%. 2. PARTNERSHIPS: On July 20, American Express OPEN announced an extension of the Lowe's (LOW) Business Rewards Card program which will continue to enable small business Card Members to earn rich rewards and get 5% off at Lowe's every day when they use the Card on eligible purchases. Last month, the credit card company also announced that it is launching the new Blue Delta SkyMiles Credit Card with Delta Air Lines (DAL). Meanwhile, Visa and MasterCard said they were enabling payments on Fitbit's (FIT) smartwatch "Fitbit Ionic," and on the new Garmin (GRMN) vivoactive 3 smartwatch. Back in July, Mastercard was selected by Kroger (KR) to be the network for the grocery retailer's 1-2-3 REWARDS co-brand credit card program, which will launch by the end of 2017. Earlier this month, Mastercard and PayPal (PYPL) announced a significant expansion of their partnership into Canada, Europe, Latin America and the Caribbean and the Middle East and Africa. 3. COMPETITIVE ENVIRONMENT: Earlier this month, Buckingham analyst Chris Brendler started coverage of American Express with a Neutral and $92 price target, saying he believes the second half 2017 will be difficult given the current competitive environment. 4. IMPROVING FUNDAMENTALS, CATALYSTS: Last week, Wells Fargo analyst Donald Fandetti resumed coverage of American Express with an Outperform rating, citing improving fundamentals and revenue growth, as well as the worst negative headlines appearing to be behind the company. The analyst also upgraded Visa to Outperform, saying its earnings model for the networks remains very much intact and are supported by pricing power and significant capital return. Fandetti told investors he expects positive earnings revisions in 2018 and for Visa Europe integration to ultimately drive expense synergies as processing systems are consolidated. Stephens analyst Brett Huff was also bullish on Visa last week, starting coverage of the stock with an Overweight rating as he thinks the company and peer MasterCard can beat near- and medium-term consensus expectations and can support higher multiples. While he also started MasterCard with an Overweight rating, he likes Visa "a bit better." 5. DIVIDEND: On September 26, American Express announced that the company's board of directors of approved a 3c, or 9%, increase in the quarterly dividend on its common stock. The dividend was raised to 35c per common share, from 32c, payable on November 10, 2017 to shareholders of record on October 6, 2017.