Visa and PayPal Surprise on Profit
- By Alberto Abaterusso
These large consumer financial services large caps have released earnings on Wednesday.
Visa Inc. (NYSE:V) issued adjusted and GAAP earnings per share of $1.30 for the first quarter of fiscal 2019 after market close and beat consensus by 5 cents. Earnings rose 21% year-over-year from revenues of $5.5 billion, which reflected 13.2% growth from the prior-year quarter. Visa also beat consensus on first-quarter revenues by $90 million.
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The intrinsic value of V
The San Francisco, California-based global financial services corporation reported 11% growth in both payments volume and processed transactions and a 7% increase in cross-border volume.
Among segments, service revenues grew 9% to $2.342 billion, data processing revenues increased 15% to $2.47 billion, international transaction revenues increased 11% to $1.851 billion and other revenues jumped 30% to $299 million. Approximately 21% of gross revenues, or $1.5 billion, was for client incentives.
Visa employed $2.9 billion in cash flows for the payment of dividends and buyback programs. Regarding buyback programs, Visa's board of directors authorized an $8.5 billion repurchase of its shares.
For full fiscal year 2019, the company forecasts annual class-A common stock adjusted earnings per share growth in the mid-teens. Visa also sees annual net revenue growth in the low double digits on a nominal basis. Both predictions consider the adverse impact from forex and new revenue accounting standard.
The stock was trading around $137.6 per share at close Wednesday for a market capitalization of approximately $312.6 billion. The share price rose 9% for the 52 weeks through Jan. 30 and is now below the 100-day simple moving average line, on par with the 200-day SMA line and above the 50-day SMA line. The 52-week range is $111.02 to $151.56.
The stock has a price-book ratio of 11.01, a price-sales ratio of 15.54 and a price-earnings ratio of 31.20. The industry has medians of 1.19 for the price-book ratio, 3.46 for the price-sales ratio and 16.14 for the price-earnings ratio.
Visa is granting a forward dividend yield of 0.74% versus an industry median of 2.72% as of Jan. 30.
The recommendation rating is 1.7 out of 5, and the average target price is $162.6.
PayPal Holdings Inc. (PYPL) released GAAP earnings per share of 49 cents for the fourth quarter of fiscal 2018 after market close. It beat consensus by 5 cents on GAAP earnings per share. The revenue of $4.23 billion grew 13.1% year-over-year, on par with expectations.
In addition, the GAAP operating margin decreased 837 basis points to 14.2% and the non-GAAP operating margin decreased 18 basis points to 21.6% in the fourth quarter of 2018 from the same quarter of 2017.
For the first quarter of fiscal 2019, the company has guided for revenue of approximately $4.08 billion to $4.13 billion versus consensus of $4.16 billion and non-GAAP earnings per share of 66 cents to 68 cents versus consensus of 68 cents.
For full fiscal year 2019, PayPal has guided for revenues of approximately $17.85 billion to $18.1 billion versus consensus for $18.04 billion and non-GAAP earnings per share of about $2.84 to $2.91 versus consensus of $2.88.
These are the most relevant key business drivers reported by PayPal on a foreign exchange rate-neutral basis. The volume growth on eBay Marketplaces was flat in the fourth quarter of 2018 compared to the same quarter of 2017. PayPal processed a total payment volume for $164 billion in the fourth quarter of 2018, which reflects 25% growth year-over-year. Approximately $19 billion was processed by Venmo in total payments volume in the fourth quarter, reflecting an 80% increase.
The share price traded around $92.4 at close Wednesday for a market capitalization of about $108.9 billion. The share price is above the 200-, 100- and 50-day simple moving average lines. The 52-week range is $70.22 to $94.58. The share price has increased 18% over the past year.
The price-book ratio is 7.2 versus an industry median of 1.19, the price-sales ratio is 7.48 versus an industry median of 3.46 and the price-earnings ratio is 53.42 versus an industry median of 16.14.
PayPal is not paying a dividend.
Disclosure: I have no positions in any securities mentioned.
This article first appeared on GuruFocus.
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The intrinsic value of V
