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Visa Inc. V is set to continue earnings beat streak for fiscal first-quarter 2022, whose results are set to be released on Jan 27, after the closing bell.
In the last reported quarter, the payments technology company’s adjusted earnings per share of $1.62 beat the Zacks Consensus Estimate by 5.9%, primarily due to solid growth in payments volume, processed transactions and cross-border volume, partially offset by elevated operating costs.
Let’s see how things have shaped up prior to the fiscal first-quarter 2022 earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for fiscal first-quarter 2022 earnings per share of $1.69 has witnessed one upward revision and three downward movements by firms in the past 30 days. This estimate is indicative of a 19% increase from the year-ago reported figure. Similarly, the Zacks Consensus Estimate for revenues is pegged at $6.8 billion, suggesting a jump of 18.9% from the year-ago reported figure.
Visa beat earnings estimates in each of the trailing four quarters, delivering an average of 9.8%. This is depicted in the graph below.
Visa Inc. Price and EPS Surprise
Visa Inc. price-eps-surprise | Visa Inc. Quote
What the Quantitative Model Suggests
Our proven model predicts an earnings beat for Visa this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +0.27%. This is because the Most Accurate Estimate is pegged higher than the Zacks Consensus Estimate of $1.69 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Visa currently holds a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
Consumers and merchants adapted to digital payments in the face of the pandemic, given the ease, convenience and security offered by the same. These trends are expected to have continued in fiscal first-quarter 2022. Consumer spending witnessed a massive improvement in 2021 amid the easing of restrictions owing to vaccination rollout, pent-up demand, higher personal savings and bullish consumer sentiment.
Hence, the Zacks Consensus Estimate for total volume — which consists of cash volume and payments volume (the primary lever of service revenues) — is pegged at $3,578 billion, indicating an increase from $3,114 billion in the year-ago period.
As the company draws revenues as a set percentage of the total transaction value every time a customer’s debit/credit card is used for making payments, higher spending on its cards means more revenues in the form of transaction processing fees. The Zacks Consensus Estimate for processed transactions (the primary driver of data processing revenues) is pegged at 47,183 million, indicating 20.3% growth year over year.
With growth in payments volume and processed transactions, Visa’s operating efficiency is expected to have improved in fiscal first-quarter 2022. These are expected to have positioned the company for not only a year-over-year growth but also for an earnings beat.
Other Stocks That Warrant a Look
Here are some other companies from the Business Services space that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
FactSet Research Systems Inc. FDS has an Earnings ESP of +0.29% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
FactSet Research Systems’ bottom line for the to-be-reported quarter is expected to rise 8.8% year over year.
WEX Inc. WEX has an Earnings ESP of +1.21% and is a Zacks #3 Ranked player.
WEX’s earnings per share for the to-be-reported quarter is expected to jump 69.7% year over year.
S&P Global Inc. SPGI has an Earnings ESP of +1.33% and a Zacks Rank #3.
S&P Global’s bottom line for the to-be-reported quarter is expected to grow 15.5% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Visa Inc. (V) : Free Stock Analysis Report
FactSet Research Systems Inc. (FDS) : Free Stock Analysis Report
WEX Inc. (WEX) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
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