Visa (NYSE:V) reported first-quarter 2020 results in January that InvestorPlace contributor Ian Cooper called “unremarkable.” Now, before owners of V stock get all indignant on me or Ian, unremarkable in this instance involved $6.1 billion in revenue, earnings of $3.3 billion, and earnings per share of $1.46.
There will be no tag days for Visa, that’s for sure. There aren’t many companies with 53% net margins. The same goes for rival Mastercard (NYSE:MA), which has to make do with 48% net margins. Oh, the humanity!
It’s been a while since I last wrote about Visa. Last July, I called it, Mastercard, and PayPal (NASDAQ:PYPL) excellent long-term holds. Nothing’s happened since to alter my thoughts. However, I would add Square (NYSE:SQ) to that list. I’ve been a fan for three years now. Its Q4 results suggest it continues to gain traction in the hotly contested world of fintech stocks.
Which of these four should you buy if you could only buy one?
Well, that depends on why you’re buying in the first place. Each of them has its pros and cons. I’d probably go with Square because it’s the smallest of the four companies, but that’s just me.
One possible way to break the stalemate is to consider all four under the ESG spotlight. ESG is hot right now and not likely to go away. In 2018, ESG investment strategies grew to more than $30 trillion globally. That’s a lot of money even to the likes of Visa and Mastercard.
Investors who fail to buy into the ESG movement over the next few years are likely to underperform. It’s that simple.
A Possible Way to Rate V Stock and the Rest of Them
The “G” in ESG stands for corporate governance. According to a recent blog post from S&P Global (NYSE:SPGI), “The purpose of the corporation, the role and makeup of boards of directors, and the compensation and oversight of top executives have emerged as core issues in companies’ corporate governance structures.”
This is too big a subject to tackle in one 700-word article.
However, I’ve long advocated for companies to speed up the process of getting more women in senior management and on the boards of directors of these companies. While six women on a board of 12 directors won’t guarantee women gain an equal say in the running of America’s companies, if enough corporations pay attention to this subject, I believe the evidence shows shareholders will be rewarded.
How are Visa and the other three companies doing at putting women on the board and in the C-Suite?
I’ve compiled a table.
Women Board Members and Named Executive Officers
|Company||Total Board Members||Women on the Board||Named Executive Officers||
Tracking these numbers isn’t as easy as it might seem. Take Square, for example.
Unlike Visa, Mastercard, and PayPal, it doesn’t have a directory of board members and management on its website. You could find out the information from Square’s Form DEF 14A. However, the information is dated March 31, 2019.
Since then, the company appointed Amy Brooks, a senior executive at the National Basketball Association, to its board on Oct. 23, 2019. And then, on Feb. 4, 2020, Square announced that current board member Ruth Simmons resigned from the board to devote more time to other commitments.
At the same time, long-time Mastercard CEO Ajay Banga announced Feb. 25 that he would step aside as CEO at the end of the year to become executive chairman, while current chief product officer Michael Miebach becomes the company’s chief executive. However, given current chairman Richard Haythornthwaite will retire from the board after 14 years of service, the numbers above will remain the same.
As I said, it’s not a fluid process. People do tend to come and go.
I was surprised that Square doesn’t have a list of directors on its website. It ought to be mandatory for all public companies to have profiles and pictures of the board of directors and named executive officers so that any changes like the ones mentioned above are reflected in real time.
The Bottom Line
If you add up the number of women for each company that serves on the board or as a NEO, you will see that Square has seven women out of 16 people serving on the board or as a NEO. That’s a 44% participation rate for women. Followed from highest to lowest are PayPal (29%), Visa (25%), and Mastercard (20%).
While I think Square can do better when it comes to women serving on its board, it’s hard to fault a company where four out of the five NEOs are women.
At least by this metric, Square is a better ESG bet than Visa.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.