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Why Is Visa (V) Up 4.1% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Visa Inc. (V - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Visa Beats on Q3 Earnings and Revenues, Tweaks View
Visa reported third-quarter fiscal 2017 (ended Jun 30, 2017) earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.80. Also, the bottom line improved 25% year over year.
Results were driven by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions. However, on the downside, the quarter witnessed higher operating expenses.
Operational Update
Net operating revenue of $4.6 billion surpassed the Zacks Consensus Estimate of $4.4 billion. Also, revenues climbed 26% year over year. This upside was primarily driven by the acquisition of Visa Europe and consistent growth in payments volume, cross-border volume and processed transactions.
On a constant dollar basis, payments volume growth for the reported quarter surged 38% year over year to $1.9 trillion. Cross-border volume growth was 147% for the quarter. Cross-border volume growth, on a constant dollar basis when normalized for Europe, was 11% year over year. This growth was partly offset by adverse foreign exchange movement.
Total processed transactions for the reported quarter were 28.5billion, reflecting a 44% rise year over year. When normalized for Europe, total processed transactions growth was 13% over the prior year quarter.
Service revenues rallied 19% year over year to $1.9 billion on payments volume in the prior quarter. Notably, other revenue components are based on the reported quarter’s activity. Data processing revenues were up 29% on a year-over-year basis to $2.0 billion, while international transaction revenues surged 45% to $1.6 billion. Other revenues remained flat year over year at $209 million.
Client incentives of $1.1 billion represented 25% of net operating revenues in the reported quarter.
Operating expenses plunged 52% year over year to $1.5 billion. Excluding special items related to the takeover of Visa Europe, operating expenses jumped 31% year over year on Visa Europe acquisition.
Foreign exchange rate shift negatively impacted earnings per share growth by approximately 2%.
Financial Update
Cash, cash equivalents and available-for-sale investment securities were $11.1 billion as of Jun 30, 2017, up from $9.9 billion as of Sep 30, 2016. Total assets were $64 billion as of Jun 30, 2017, almost flat with 2016 fiscal year end level.
Dividend and Share Repurchase Update
Visa repurchased shares worth $2.1 billion during the quarter. The company currently has $5.5 billion of funds available for share repurchase.
On Jul 17, 2017, the board of directors approved of a quarterly cash dividend of $0.165 per share. The dividend will be paid on Sep 5, to the shareholders of record as of Aug 18.
Fiscal 2017 Guidance
For fiscal 2017, Visa largely reaffirmed its guidance. Annual operating margin is anticipated at mid-60%, while client incentives are expected to account for 20–20.5% of gross revenue. Additionally, the effective tax rate projection has been reiterated at 30%.
Visa reaffirmed annual net revenue growth of 20% with an adverse foreign currency impact of 2%. Adjusted earnings per share growth are projected to be 20% on a normal dollar basis, including 2.5% of negative foreign currency impact.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, the stock has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Visa (V) Up 4.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Visa Inc. (V - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Visa Beats on Q3 Earnings and Revenues, Tweaks View
Visa reported third-quarter fiscal 2017 (ended Jun 30, 2017) earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.80. Also, the bottom line improved 25% year over year.
Results were driven by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions. However, on the downside, the quarter witnessed higher operating expenses.
Operational Update
Net operating revenue of $4.6 billion surpassed the Zacks Consensus Estimate of $4.4 billion. Also, revenues climbed 26% year over year. This upside was primarily driven by the acquisition of Visa Europe and consistent growth in payments volume, cross-border volume and processed transactions.
On a constant dollar basis, payments volume growth for the reported quarter surged 38% year over year to $1.9 trillion. Cross-border volume growth was 147% for the quarter. Cross-border volume growth, on a constant dollar basis when normalized for Europe, was 11% year over year. This growth was partly offset by adverse foreign exchange movement.
Total processed transactions for the reported quarter were 28.5billion, reflecting a 44% rise year over year. When normalized for Europe, total processed transactions growth was 13% over the prior year quarter.
Service revenues rallied 19% year over year to $1.9 billion on payments volume in the prior quarter. Notably, other revenue components are based on the reported quarter’s activity. Data processing revenues were up 29% on a year-over-year basis to $2.0 billion, while international transaction revenues surged 45% to $1.6 billion. Other revenues remained flat year over year at $209 million.
Client incentives of $1.1 billion represented 25% of net operating revenues in the reported quarter.
Operating expenses plunged 52% year over year to $1.5 billion. Excluding special items related to the takeover of Visa Europe, operating expenses jumped 31% year over year on Visa Europe acquisition.
Foreign exchange rate shift negatively impacted earnings per share growth by approximately 2%.
Financial Update
Cash, cash equivalents and available-for-sale investment securities were $11.1 billion as of Jun 30, 2017, up from $9.9 billion as of Sep 30, 2016. Total assets were $64 billion as of Jun 30, 2017, almost flat with 2016 fiscal year end level.
Dividend and Share Repurchase Update
Visa repurchased shares worth $2.1 billion during the quarter. The company currently has $5.5 billion of funds available for share repurchase.
On Jul 17, 2017, the board of directors approved of a quarterly cash dividend of $0.165 per share. The dividend will be paid on Sep 5, to the shareholders of record as of Aug 18.
Fiscal 2017 Guidance
For fiscal 2017, Visa largely reaffirmed its guidance. Annual operating margin is anticipated at mid-60%, while client incentives are expected to account for 20–20.5% of gross revenue. Additionally, the effective tax rate projection has been reiterated at 30%.
Visa reaffirmed annual net revenue growth of 20% with an adverse foreign currency impact of 2%. Adjusted earnings per share growth are projected to be 20% on a normal dollar basis, including 2.5% of negative foreign currency impact.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Visa Inc. Price and Consensus
Visa Inc. Price and Consensus | Visa Inc. Quote
VGM Scores
At this time, the stock has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.