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Visa (V) to Report Q4 Earnings: Can it Deliver a Beat Again?

Zacks Equity Research
·3 min read

Visa, Inc. V is set to report fourth-quarter fiscal 2020 earnings on Oct 28, after the market closes.

In the last reported quarter, the company reported earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 3.92%. However, the bottom line declined 23% year over year. Contraction in payments volume and processed transaction, and lower cross-border revenues, primarily attributable to the COVID-19 pandemic, impacted the company’s results.

Let’s see how things have been shaping up for this announcement.

We expect results to reflect higher payments volume and processed transaction, partly offset by a decline in cross-border revenues, which were affected by the spending cuts due to the COVID-19 outbreak.

Management recently informed that the company’s business started  picking up, driven by a rise in spending owing to relaxation of shelter-in-place restrictions, which were earlier enforced to limit the spread of the coronavirus pandemic. The rebound in business might reflect on the impending quarterly results.

In July and August, U.S. payments volume grew 8% and 7%, respectively while processed transactions were up 1% and 3% in July and August each.

Cross-border volumes are likely to have gone down due to weak travel-related cross-border volumes. In July and August, cross-border volume including Intra-Europe transactions decreased 32% and 30%, respectively.

The company is thus likely to report a decline in cross-border transaction volumes for the fiscal fourth quarter, which in turn, might have dragged International transaction revenues.

Total operating expenses are likely to have declined, primarily due to lower marketing, and general and administrative expenses.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Visa’s fourth-quarter fiscal 2020 earnings of $1.09 per share implies a 25.9% deterioration from the prior-year period’s reported number. Likewise, the consensus estimate for sales of $5.02 billion suggests an 18.2% drop from the year-ago quarter’s reported figure.

Earnings Surprise History

The company boasts a pleasant earnings surprise record. Its bottom line surpassed estimates in each of the last three (and missed in one) quarters, the average beat being 2.42%. This is depicted in the chart below:

Visa Inc. Price and EPS Surprise

Visa Inc. Price and EPS Surprise
Visa Inc. Price and EPS Surprise

Visa Inc. price-eps-surprise | Visa Inc. Quote

Earnings Whispers:

Our proven model predicts a beat for Visa this earnings season. The combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise.

You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Earnings ESP: Visa has an Earnings ESP of +0.30%.

Zacks Rank: Visa currently carries a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks That Warrant a Look

Some other stocks worth considering from the same space with the right combination of elements to beat on earnings this time around are:

PayPal Holdings, Inc. PYPL has an Earnings ESP of +1.14% and a Zacks Rank of 3, currently.

Global Payments Inc. GPN has an Earnings ESP of +1.29% and is a #3 Ranked player at present.

Mastercard Inc. MA has an Earnings ESP of +2.26% and is currently Zacks #3 Ranked.

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Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock Analysis Report
 
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