Will Higher Transactions Processed Aid Visa (V) Q2 Earnings?
A surge in the number of transactions processed, one of the key revenue drivers for Visa Inc. V, is likely to have driven its second-quarter fiscal 2020 performance.
Number of processed transactions boosts Visa’s Data processing revenues, accounting for nearly 35% of its total revenues in fiscal 2019.
Data processing revenues consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the company's clients globally.
So, let’s take a look at how processed transactions might have impacted the company’s performance in the to-be-reported quarter. Click here to know how the company’s overall second-quarter fiscal 2020 results are expected to be.
Let’s Delve Deeper
The Zacks Consensus Estimate for revenues from Data Processing is pegged at $2.73 billion, indicating an increase of 12.3% from the year-ago reported figure while the consensus mark for processed transactions stands at 46.6 billion, implying a 10.6% improvement from the prior-year reported number.
Region wise, Visa’s transaction processed is likely to have benefited from Europe (expected to have climbed 3.9%) while the same for Asia-Pacific might have been down 2.9%. The metric was against expected to have risen 21.6% in CEMEA, 8.9% in Lac, 6.6% in Canada and 7.1% in the United States.
The number of transactions processed are expected to have increased in the quarter under review, repeating the trend from the last few quarters owing to the ongoing worldwide shift to electronic payments. However, a decline in spending across Asia due to the COVID-19 breakdown is likely to have hurt spending in the region.
On the flip side, massive investments in technology helped the company to process higher transactions every quarter and the same is likely to have continued in the fiscal second quarter.
Growing acceptance of its products and expansion of its merchant network are likely to have spurred the number of transactions processed. At the end of 2019, the company had more than 61 million physical merchant locations, up 14% from the 2018-level. Notably, merchant point is the physical location at which transaction takes place.
Visa Inc. Price and EPS Surprise
Visa Inc. price-eps-surprise | Visa Inc. Quote
Q2 Earnings & Revenue Expectations
The Zacks Consensus Estimate for Visa’s second-quarter earnings of $1.35 per share implies a 3.05% increase from the prior-year reported number. Likewise, the consensus estimate for sales of $5.78 billion suggests 5.25% growth from the year-ago reported figure.
Visa carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Here are some stocks worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this time around:
Virtu Financial, Inc. VIRT has an Earnings ESP of +39.67% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Green Dot Corp. GDOT has an Earnings ESP of +8.19% and is Zacks #3 Ranked.
Global Payments Inc. GPN has an Earnings ESP of +0.59% and a Zacks Rank of 3.
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