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Visa (V) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 min read

Visa (V) closed the most recent trading day at $211.19, moving +1.4% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.58%. Elsewhere, the Dow gained 0.49%, while the tech-heavy Nasdaq added 0.84%.

Coming into today, shares of the global payments processor had gained 0.21% in the past month. In that same time, the Business Services sector gained 2.16%, while the S&P 500 gained 2.12%.

V will be looking to display strength as it nears its next earnings release. On that day, V is projected to report earnings of $1.27 per share, which would represent a year-over-year decline of 13.01%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.51 billion, down 9.01% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.44 per share and revenue of $23.23 billion, which would represent changes of +7.94% and +6.31%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for V. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.66% lower within the past month. V is currently a Zacks Rank #4 (Sell).

In terms of valuation, V is currently trading at a Forward P/E ratio of 38.27. This valuation marks a premium compared to its industry's average Forward P/E of 28.47.

Also, we should mention that V has a PEG ratio of 3.78. 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. The Financial Transaction Services was holding an average PEG ratio of 2.04 at yesterday's closing price.

The Financial Transaction Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 200, which puts it in the bottom 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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Zacks Investment Research