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Visa (V) Q4 Earnings to Gain From Transactions Processed

Zacks Equity Research

 Visa Inc. V is scheduled to report its fourth-quarter fiscal 2019 results on Oct 24. The company’s bottom line is likely to have benefited from an increase in Data Processing Revenues, which form nearly 35% of its total revenues and is dependent on the number of transactions processed.

Click here to know how the company’s overall fourth-quarter fiscal 2019 performance is expected to be.

Let’s Delve Deeper

In the first nine months of fiscal 2019, revenues from Data Processing, which is earned by authorizing, clearing, settling, providing network access, and other services for the transactions processed, increased 14% on 11% growth in transactions processed.

The Zacks Consensus Estimate for  revenues from this business line is pegged at $2.8 billion, indicating an increase of  15.6% year over year on an expected 12% improvement in processed transactions to 47.3 billion. Region wise, Visa’s transaction processed is likely to have benefited from Europe (expected to have climbed 13.1%), Asia-Pacific (13%), CEMEA (26%), Lac (10%) and the United States (8%).

The number of transactions processed is expected to have risen in the fourth quarter as well due to increased adoption of Visa’s tap-to-pay service, which has improved point-of-sale experience. There are now almost 50 countries, where contactless is at least a third of all face-to-face transactions, up from 35 countries at the end of last fiscal year in September.

In the United States, the company is well underway to reach 100 million tap-to-pay Visa cards in force by the end of 2019, and the service has already seen good adoption amongst consumers.

Visa is making an effort to expand its tap-to-pay services for transit. Recently, the New York MTA launched an open-loop payments and a pilot at a limited number of stations as part of an 18-month rollout. This is likely to have benefited the company’s fourth-quarter performance.

Other areas where the company is making progress to improve the user experience include tokenization, secure remote commerce, and the installation payment solution it is piloting. These efforts are likely to have led to incremental volume and transactions in the quarter under review.

Visa carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks worth considering are Green Dot Corporation GDOT, FleetCor Technologies, Inc.FLT and Diebold Nixdorf, Incorporated DBD. While Green Dot sports a Zacks Rank #1, FleetCor and Diebold Nixdorf carry a Zacks Rank #2 (Buy).

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