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Visa (V) Gains But Lags Market: What You Should Know

Zacks Equity Research
Hill-Rom (HRC) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Visa (V) closed at $157.36 in the latest trading session, marking a +0.75% move from the prior day. This move lagged the S&P 500's daily gain of 1.16%. Elsewhere, the Dow gained 1.27%, while the tech-heavy Nasdaq added 1.29%.

Prior to today's trading, shares of the global payments processor had gained 5.45% over the past month. This has outpaced the Business Services sector's gain of 4.55% and the S&P 500's gain of 1.92% in that time.

Investors will be hoping for strength from V as it approaches its next earnings release. The company is expected to report EPS of $1.24, up 11.71% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $5.45 billion, up 7.5% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.33 per share and revenue of $22.76 billion. These totals would mark changes of +15.62% and +10.41%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for V. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.05% higher. V is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, V is currently trading at a Forward P/E ratio of 29.3. This represents a premium compared to its industry's average Forward P/E of 21.05.

We can also see that V currently has a PEG ratio of 1.78. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Financial Transaction Services stocks are, on average, holding a PEG ratio of 1.61 based on yesterday's closing prices.

The Financial Transaction Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 152, which puts it in the bottom 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow V in the coming trading sessions, be sure to utilize Zacks.com.


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