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Visa's (V) Q2 Earnings Beat Estimates on Solid Payments Volume

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·4 min read
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Visa Inc. V reported second-quarter fiscal 2022 earnings of $1.79 per share, which beat the Zacks Consensus Estimate by 8.5%. The bottom line improved 30% year over year.

Net revenues of $7.2 billion climbed 25% year over year in the quarter under review. The top line outpaced the consensus mark by 5.1%.

Visa’s quarterly results benefited from strong growth in payments volume, processed transactions and cross-border volume, partly offset by elevated operating costs.

The leader in digital payments expects growth for its businesses to continue in the days ahead, courtesy of solid recovery in travel and by empowering consumers with traditional and newer ways to pay globally.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. Price, Consensus and EPS Surprise

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

Operational Performance

Payments volume of Visa on a constant-dollar basis climbed 17% year over year in the March-quarter. Reflecting transactions processed by Visa, processed transactions rose 19% year over year to 44.8 billion.

On a constant-dollar basis, total cross border volume of Visa improved 38% year over year in the quarter under review. Meanwhile, its cross-border volume, excluding transactions within Europe, surged 47% year over year on a constant-dollar basis. The metric usually bolsters V’s international transaction revenues.

Service revenues grew 24% year over year to $3.5 billion on the back of higher payments volume in the prior quarter. While data processing revenues of $3.5 billion climbed 16% year over year, other revenues grew 21% year over year to $474 million. International transaction revenues of $2.2 billion surged 48% year over year in the March-quarter.

Client incentives amounted to $2.5 billion, which increased 25% year over year.

Operating expenses escalated 16% year over year due to a rise in marketing, personnel as well as general and administrative expenses.

Interest expense of $134 million increased 10.7% year over year in the quarter under review.

Balance Sheet (as of Mar 31, 2022)

Visa exited the March-quarter with cash and cash equivalents of $12.3 billion, which decreased 25.4% from fiscal year end Sep 30, 2021.

Total assets were $81.8 billion, down 1.3% from fiscal year end Sep 30, 2021.

Long-term debt declined 12.5% from fiscal year end Sep 30, 2021 to $17.5 billion. Current maturities of debt amounted to $3.5 billion.

Cash Flow

During the quarter under review, net cash provided by operating activities improved 4.8% from the year-ago comparable period to $3.5 billion. Free cash flow was recorded at $3.2 billion in the quarter under review, up 1.6% year over year.

Boosting Shareholder Value

Visa returned $3.7 billion to shareholders through share repurchases and dividends in the March-quarter.

As of Mar 31, 2022, V had leftover authorized funds of $9.7 billion under its share buyback program.

On Apr 22, 2022, Visa’s board of directors approved a quarterly cash dividend of 37.5 cents per share. The dividend will be paid on Jun 1, 2022 to shareholders of record as of May 13.

Zacks Rank

Visa currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another Business Services Sector Sector Release

Of the Business Services sector players that have already released their respective quarterly results so far, the bottom line of Equifax Inc. EFX beat the Zacks Consensus Estimate.

Equifax reported adjusted earnings of $2.22 per share, which beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. Revenues of EFX amounted to $1.36 billion, which outpaced the consensus mark by 2.4% and improved 12.4% year over year on a reported basis and 13% on a local-currency basis.

Upcoming Releases

Here are some companies worth considering from the business services space as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Cross Country Healthcare, Inc. CCRN has an Earnings ESP of +1.67% and a Zacks Rank #1, currently. The Zacks Consensus Estimate for Cross Country Healthcare’s first-quarter earnings is pegged at $1.40, which indicates more than doubling itself from the prior-year quarter’s reported figure.

CCRN beat earnings estimates in each of the trailing four quarters in 2021.

Huron Consulting Group Inc. HURN has an Earnings ESP of +38.26% and a Zacks Rank of 2, presently. The Zacks Consensus Estimate for Huron Consuting’s first quarter earnings stands at 38 cents, suggesting growth of 8.6% from the prior-year quarter’s reported figure.

HURN’s earnings beat estimates in three of the trailing four quarters of 2021 and missed once.


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Visa Inc. (V) : Free Stock Analysis Report

Equifax, Inc. (EFX) : Free Stock Analysis Report

Huron Consulting Group Inc. (HURN) : Free Stock Analysis Report

Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report

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