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Will Visa (V) Q4 Earnings Buoy Up on Better Payment Volumes?

Zacks Equity Research

Visa Inc.’s V fiscal fourth-quarter results scheduled for Oct 25, are expected to benefit from Payments volumes — one of the key revenue drivers set to surge on strength in India, the United States, Russia, Mexico and Australia. The Zacks Consensus Estimate for Payments volume from the Asia-Pacific is $437 billion, up 8.7% year over year.

The U.S. dollar has weakened this year, which is likely to drive more volume, particularly inbound. Also, improved spending trends in the global economy and the acquisition of Visa Europe should support overall Payments volumes. The Zacks Consensus Estimate for the same is pegged at $1,967 billion, up a good 20% year over year.

Visa’s fourth-quarter fiscal 2017 earnings are likely to reflect solid revenue growth led by factors such as increased spending as the economy continues to grow and shift toward spending on cards and increased pricing. These factors will likely push up International Transaction Revenues.  

Growth in processed transaction is likely to push up Data Processing fees. The Zacks Consensus Estimate for the same is $2 billion, up 20% year over year.  

Also, lower-than-expected incentives must have aided margins, as Visa has slightly delayed moving some European clients to an incentive structure.

A moderation in the exchange drag will also aid margins.  

The company has accelerated share buyback activity to offset the equity dilution from the Visa Europe transaction. Increased share buyback will provide an added shield to its bottom line.

Here is what our quantitative model predicts:

Our proven model shows that Visa has the right combination of the two key ingredients to beat earnings estimates.

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.01%.
The positive ESP is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Visa carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating on earnings.

Visa Inc. Price and EPS Surprise

Visa Inc. Price and EPS Surprise | Visa Inc. Quote

Other Stocks to Consider

Amerisafe Inc. AMSF will report third-quarter 2017 earnings results on Oct 25. The company has an Earnings ESP of +3% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Voya Financial, Inc. VOYA has an Earnings ESP of +1.7% and a Zacks Rank of 3. The company is expected to report third-quarter earnings results on Oct 31.

Capital One Financial COF has an Earnings ESP of +0.4%. This Zacks #3 Ranked company is expected to report third-quarter earnings results on Oct 24.

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