U.S. Markets closed

Why Is Visa (V) Up 8.8% Since Its Last Earnings Report?

Zacks Equity Research
1 / 2

Barnes Group (B) Q3 Earnings Preview: What to Know Ahead of the Release

Barnes Group (B) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

It has been about a month since the last earnings report for Visa Inc. V. Shares have added about 8.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is V due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Visa Beats Q2 Earnings Estimates, Raises 2018 Guidance

Led by higher spending on its branded cards, Visa Inc. reported second-quarter fiscal 2018 (ended Mar 31, 2018) earnings of $1.11 per share, beating the Zacks Consensus Estimate by 9.9%. Also, the bottom line improved 30% year over year.

Results were driven by continued double-digit growth in payments volume, cross-border volume and processed transactions as a strong economy and a positive consumer sentiment led to higher spending.

Strong Performance

Net operating revenues of $5.07 billion surpassed the Zacks Consensus Estimate of $4.77 billion. Also, revenues climbed 13% year over year. This upside was primarily driven by consistent growth in payments volume, cross-border volume and processed transactions.

On a constant dollar basis, payments volume growth for the fiscal second quarter improved 10.5% year over year to $1.99 trillion. Cross-border volume growth, on a constant dollar basis, was 11% in the quarter. Visa's processed transactions increased 12% over the prior year to 29.3 billion.

Service revenues increased 13% year over year to $2.3 billion on higher nominal payments volume recognized on payments volume in the prior quarter.

Notably, other revenue components are based on the reported quarter’s activity. Data processing revenues were up 15% on a year-over-year basis to $2.1 billion, while international transaction revenues grew 19% to $1.8 billion.

Other revenues increased 13% year over year to $230 million.

Client incentives of $1.3 billion increased 25% year over year and represented 20.3% of gross revenues in the reported quarter.

Adjusted operating expenses increased 18% year over year to $1.7 billion, primarily due to higher personnel and marketing expenses. Interest expense increased by 13.3% year over year to $153 million.

Exchange rate shifts from the prior year positively impacted earnings per share growth by approximately 1.5 percentage points.

Balance Sheet Strengthens

Cash, cash equivalents and available-for-sale investment securities were $14.2 billion as of Mar 31, 2018, up 74% from Dec 31, 2017.

Total assets were $69 billion as of Mar 31, 2018, up 1.6% from fiscal 2017, ended Sep 30, 2017.

In the fiscal second quarter, the company generated adjusted free cash flow of $2.6 billion.

Share Repurchase and Dividend Update

During the reported quarter, the company repurchased shares worth $2 billion. On Apr 17, 2018, the company declared a quarterly dividend of $0.2 per share, which will be paid on Jun 5, to its shareholders on record as of May 18.

2018 Guidance

Driven by strong results and a favorable outlook for the remainder of the year, Visa raised its 2018 guidance provided earlier.

The company expects annual net revenue growth in low double digits on a nominal basis, with approximately 1% of positive foreign currency impact.

This compares with the earlier estimate of high single digits revenue growth, with approximately 0.5 of favorable currency impact.

The high end of client incentives as a percentage of gross revenues has been lowered. It now expects the same in the range of 21.5 from the earlier range of 21.5% to 22.5%.

Visa estimates GAAP and effective tax rate of 21% to 22% down from earlier estimate of 23% from 29%, due to U.S tax reform

It expects annual operating expense increase in low double digits (versus the high end of mid-single digits as earlier) adjusted for special items in fiscal 2017.

The company projected earnings per share (EPS) growth of mid-60s (versus mid-50s earlier) on a GAAP nominal dollar basis and high-20s (high end of mid-20s) on an adjusted, non-GAAP basis (EPS includes approximately 1.5% of positive foreign currency impact and 9% to 10% of benefit from tax reform).

The guidance on annual operating margin of high 60s was kept unchanged.

Business Update

During the fiscal second quarter, the company acquired Fraedom, a Software-as-a-Service technology company providing payments and transactions management solutions for financial institutions and their corporate customers. The deal will enhance Visa’s capabilities in the Business-to-Business payments industry.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions higher for the current quarter compared to seven lower.

Visa Inc. Price and Consensus

 

Visa Inc. Price and Consensus | Visa Inc. Quote

VGM Scores

At this time, V has an average Growth Score of C. Its Momentum is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, V has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Visa Inc. (V) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

  • These 5 things will kill your early retirement dreams
    News
    MarketWatch

    These 5 things will kill your early retirement dreams

    OUTSIDE THE BOX Early retirement is all the rage these days in personal finance circles. And when I say “early”, I mean really early. I retired at 52 and today’s crowd makes me feel like a slacker. People are retiring in their

  • 3 Warren Buffett Stocks Worth Buying Now
    Business
    Motley Fool

    3 Warren Buffett Stocks Worth Buying Now

    Known as the Oracle of Omaha, Warren Buffett has collected both an incredible investment record and a deservedly vast following among investors of all types. Every move he makes is scrutinized in the hope of gleaning  wisdom from his investment choices.

  • Better Buy: Ford Motor Company vs. General Motors
    Business
    Motley Fool

    Better Buy: Ford Motor Company vs. General Motors

    Both Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) have been investor favorites in the not-too-distant past, and both pay good dividends. Ford has a slew of new products on the way, starting with a brand-new Ranger pickup early next year. Ford and GM have both had a rough year in the stock market.

  • Business
    Investopedia

    Market Sell-Off 80% Over, Will Be Reversed by Stock Repurchases: JPMorgan

    Last week, global markets were hit with a widespread shock that weighed on nearly all asset classes, encompassing even the cryptocurrency space, once viewed as a type of "safe haven" bet unrelated to the broader market. In a note to clients on Thursday, JPMorgan equity strategist Dubravko Lakos-Bujas and team forecasted for U.S. equities to make a comeback as fundamentals come back into play, highlighting stock buybacks as a key driver of the nine-year-bull market, as reported by CNBC.

  • Business
    Reuters

    Iraq lines up GE and Siemens for power infrastructure work

    Iraq has signed agreements with General Electric and Siemens (SIEGn.DE) over potential deals to develop the country's power infrastructure, the electricity ministry said on Sunday. Siemens had been favourite to win a contract to supply 11 gigawatts of power-generation equipment in a possible $15 billion deal, though the Financial Times reported on Wednesday that the German group may have to share the work with U.S. rival GE after pressure from U.S. President Donald Trump's administration. An Iraq electricity ministry official confirmed there had been pressure from the United States.

  • Should Congress cut entitlement programs to combat rising deficit?
    Politics
    Fox Business Videos

    Should Congress cut entitlement programs to combat rising deficit?

    Maya MacGuineas, Committee for a Responsible Federal Budget, and Wall Street Journal editorial page deputy editor James Freeman discuss America’s deficit problem and how President Trump asked members of his Cabinet to cut their departments’ budgets by 5 percent.

  • Colorado’s Marijuana Market Just Hit This Huge Milestone
    Business
    Motley Fool

    Colorado’s Marijuana Market Just Hit This Huge Milestone

    Marijuana has been legally available in Colorado for recreational use since 2014, and consumers' appetite for marijuana products continues to grow due to the launch of new products, including concentrates and edibles. As a result, Colorado's annual marijuana sales surpassed $1 billion in August -- the earliest it has ever achieved that milestone. There's been some debate over how much money would move from the black market to regulated markets following legalization, but Colorado's experience suggests it's substantial.

  • The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs
    News
    MarketWatch

    The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • Hate Taxes? 37 States Make Social Security Tax Free
    Business
    Motley Fool

    Hate Taxes? 37 States Make Social Security Tax Free

    Over the course of your career, you'll probably have tens of thousands of dollars in Social Security payroll taxes withheld from your paychecks. Workers are confident that by paying those taxes up front, they'll be able to collect Social Security benefits

  • MBS Says the Saudi Consulate in Turkey Is 'Sovereign Territory.' He's Wrong.
    World
    Time

    MBS Says the Saudi Consulate in Turkey Is 'Sovereign Territory.' He's Wrong.

    As speculation grew about the fate of the Saudi journalist Jamal Khashoggi, who vanished after entering his nation’s consulate in Istanbul on Oct. 2, the Saudi crown prince Mohammed bin Salman was quick to dispel rumors he had been murdered. “We have nothing to hide,” the de-facto Saudi leader, known by his initials MBS, said three days later. On one thing at least, the Crown Prince was mistaken — consulates and embassies are not, in fact, sovereign territory under international law.

  • 3 Top Stocks Under $5
    Business
    Motley Fool

    3 Top Stocks Under $5

    If you're looking for cheap stocks, focusing too much on share price is a mistake. Companies like Zynga (NASDAQ: ZNGA), Chesapeake Energy (NYSE: CHK), and Ascena Retail Group (NASDAQ: ASNA) have mounted impressive comebacks over the past year, and the future could hold even further gains if the industry conditions that they face take a turn for the better.

  • Business
    Benzinga

    Morgan Stanley's Recipe For Strong Q4 Guidance From Tesla

    Tesla Inc. (NASDAQ: TSLA) is set to report third-quarter earnings data in early November after a whirlwind of a quarter that included a chain of events that began Aug. 7 with CEO Elon Musk’s “funding secured” tweet and ended with a Securities and Exchange

  • 3 Energy Stocks You Can Buy and Hold for the Next Decade
    Business
    Motley Fool

    3 Energy Stocks You Can Buy and Hold for the Next Decade

    North America needs to build $23 billion of new natural gas-related infrastructure annually through 2035, according to a recent report. Three of the best positioned to capture this growth are Kinder Morgan (NYSE: KMI), Williams Companies (NYSE: WMB), and TransCanada (NYSE: TRP), making them great stocks to buy and hold in the coming decade. Kinder Morgan is already the largest natural gas pipeline company in North America, operating roughly 70,000 miles of pipeline.

  • Now is a ‘once-in-a-lifetime’ chance to invest in US pot companies, investor says
    Finance
    Yahoo Finance

    Now is a ‘once-in-a-lifetime’ chance to invest in US pot companies, investor says

    With some Canadian pot stocks posting triple-digit return rates this year, many retail investors have looked north to pour cash into cannabis. U.S. cannabis companies are worth a lot more than their current valuations suggest since federal illegality has put undue pressure on the industry, said David Wenger, a New York attorney and senior editor of the Cannabis Law Digest.

  • Why Advanced Micro Devices, Inc. Stock Closed 11% Lower on Friday
    Business
    Motley Fool

    Why Advanced Micro Devices, Inc. Stock Closed 11% Lower on Friday

    Analyst Pierre Ferragu from financial firm New Street Research set his price target for AMD at $18 per share, arguing that the stock has been priced for a level of success that simply isn't realistic. "AMD's stock price reflects a scenario we don't believe possible," Ferragu wrote. In particular, Ferragu sees larger rival Intel (NASDAQ: INTC) getting its manufacturing act together as we speak.

  • This Warren Buffett Stock Is Dirt Cheap Right Now
    Business
    Motley Fool

    This Warren Buffett Stock Is Dirt Cheap Right Now

    Warren Buffett has amassed a large portfolio of bank stocks for Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) with major holdings in Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and American Express (NYSE: AXP), just to name a few of the most well-known and largest investments. Synchrony is a major issuer of store-branded credit cards and also operates a rapidly growing online banking platform.

  • 3 Great Stocks Under $10
    Business
    Motley Fool

    3 Great Stocks Under $10

    Among the stocks you can currently purchase for less than $10 per share are Sirius XM Holdings (NASDAQ: SIRI), Annaly Capital Management (NYSE: NLY), and Infosys (NYSE: INFY), and below, we'll take a look at how long they're likely to remain this cheap for would-be investors. Sirius XM was a pioneer in the satellite radio industry, and it's been an investor favorite for years.

  • Jackpot stocks that could make you a billionaire
    GILD
    CNBC Videos

    Jackpot stocks that could make you a billionaire

    Following on the Mega Millions madness, the traders give you stocks that could make you a billionaire. With CNBC's Frank Holland and Melissa Lee, and the Fast Money traders, Tim Seymour, Steve Grasso, Brian Kelly and Dan Nathan.

  • Will Cloud and Improving Margins Dominate Amazon's Earning Report?
    Business
    Motley Fool

    Will Cloud and Improving Margins Dominate Amazon's Earning Report?

    Part of what drove the company to those dizzying heights was the impressive results Amazon has produced so far this year. The company grew revenue an impressive 41% year over year in the first half of 2018, but Amazon Web Services (AWS) is doing even better, up 48% compared to the first six months of last year. All signs point to another strong performance when Amazon reports the financial results of its third quarter after the market close on Thursday, Oct. 25, but let's look at Amazon's most recent results and see what the company will need to do to continue its upward momentum.

  • Better High-Yield Dividend Stock: PPL Corp. vs. the Southern Company
    Business
    Motley Fool

    Better High-Yield Dividend Stock: PPL Corp. vs. the Southern Company

    Giant diversified U.S. utility The Southern Company (NYSE: SO) offers investors a yield of 5.5%. Globally diversified electric company PPL Corp. (NYSE: PPL) has a yield of 5.4%. Those figures are both at the high end of the utility sector, which might

  • Why Procter & Gamble, Skechers USA, and Synchrony Financial Jumped Today
    Business
    Motley Fool

    Why Procter & Gamble, Skechers USA, and Synchrony Financial Jumped Today

    The stock market ended Friday mixed, with the Dow Jones Industrial Average picking up 0.26% even as the Nasdaq Composite and the S&P 500 posted modest declines. Market participants once again responded negatively to news of rising interest rates -- including the 10-year Treasury bond's jump in yield to the 3.2% mark -- as a potential signal that the long bull market in stocks was ending. Procter & Gamble (NYSE: PG), Skechers USA (NYSE: SKX), and Synchrony Financial (NYSE: SYF) were among the best performers on the day.

  • Suze Orman has a killer question for your retirement
    Business
    MarketWatch

    Suze Orman has a killer question for your retirement

    Suze Orman is one of those singular personalities in the financial business who seems to be right on the pulse of everyone she meets. She’s written books, starred in her own television show and made innumerable appearances in person. Like Oprah

  • 1 Top Stock to Buy Amid October’s Turbulent Market
    Business
    Motley Fool

    1 Top Stock to Buy Amid October’s Turbulent Market

    In the past three weeks alone, stocks have tumbled about 5%, which has many investors unnerved. One top option to consider amid the current turbulence is Magellan Midstream Partners (NYSE: MMP), which has lost more than 5% of its value in the past few weeks. Because of that, investors can get an even better starting price on one of the top master limited partnerships (MLPs), potentially setting themselves up to earn market-beating returns in the coming years.

  • Why PBF Energy Inc and Other Refining Stocks Are Getting Clobbered Today
    Business
    Motley Fool

    Why PBF Energy Inc and Other Refining Stocks Are Getting Clobbered Today

    Shares of PBF Energy Inc (NYSE: PBF) tumbled as much as 10.9% on Friday, joining a sectorwide sell-off that also saw refiners Valero Energy (NYSE: VLO), Phillips 66 (NYSE: PSX), Marathon Petroleum (NYSE: MPC), and HollyFontier (NYSE: HFC) take it on the chin by sinking more than 5% at one point in the day. A trio of factors seems to be driving these declines.

  • Why Valero Energy, eBay, and New Age Beverages Slumped Today
    Business
    Motley Fool

    Why Valero Energy, eBay, and New Age Beverages Slumped Today

    Some major market benchmarks managed to hang onto their gains, but the Nasdaq Composite, and Russell 2000 indexes posted losses of 0.5% to 1.25%, and the S&P 500 was virtually flat. Valero Energy (NYSE: VLO), eBay (NASDAQ: EBAY), and New Age Beverages (NASDAQ: NBEV) were among the worst performers on the day. Valero Energy dropped 10% after the refinery company announced that it would buy back all outstanding units of its related MLP, Valero Energy Partners (NYSE: VLP).