Last week saw the newest first-quarter earnings release from Visa Inc. (NYSE:V), an important milestone in the company's journey to build a stronger business. Results were roughly in line with estimates, with revenues of US$6.1b and statutory earnings per share of US$1.46. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Visa from 32 analysts is for revenues of US$25.4b in 2020, which is a reasonable 7.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to climb 12% to US$6.15. In the lead-up to this report, analysts had been modelling revenues of US$25.4b and earnings per share (EPS) of US$6.19 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$224. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Visa analyst has a price target of US$251 per share, while the most pessimistic values it at US$166. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Visa's past performance and to peers in the same market. It's pretty clear that analysts expect Visa's revenue growth will slow down substantially, with revenues next year expected to grow 7.8%, compared to a historical growth rate of 13% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Visa to grow slower than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Visa going out to 2022, and you can see them free on our platform here.
You can also see whether Visa is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.