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Will Revenue Growth Aid Visa's (V) Earnings This Season?
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Visa Inc. (V - Free Report) is scheduled to announce fiscal third-quarter 2018 results on Jul 25, after the closing bell. Its quarterly revenues and earnings are expected to improve year over year.
The company is expected to benefit from a strong global economy, which is likely to aid payments’ volume growth.
Last quarter, Visa’s earnings beat the Zacks Consensus Estimate by 9.9%. Also, the bottom line improved 25.6% year over year. Results were driven by continued growth in payments volume, cross-border volume and processed transactions.
Factors Likely to Impact Q3 Results
Visa’s fiscal third-quarter results are likely to be driven by higher revenues from growth of key business drivers such as payments volume, cross border volume and process transactions.
The company is likely to report an increase in service revenues, a component of total revenues which is recognized based on payments volumes in the prior quarter. Payments volume in the fiscal second quarter was up 11%. The Zacks Consensus Estimate for Service revenues stands at $2.27 billion, up 16.6% year over year.
Healthy economies around the world and growth and acceptance of electronic and mobile commerce, especially in developed countries, have likely led to an increase in processed transactions, which should drive Data Processing revenues. The Zacks Consensus Estimate for the same is $2.28 billion, up 15% year over year.
High gas prices and increased spending in retailare likely to have buoyed Visa’s total payments’ volumes. The Zacks Consensus Estimate indicates an increase of 12.3% to $2.09 billion in the fiscal second quarter.
Growth of inbound commerce into the United States should be affected by a strengthening dollar, which should be partially offset by initiatives to grow cross-border volume. A stressed cross-border business and adverse foreign exchange should have weighed on revenues from International operations.
Visa is making significant investments in its business initiatives and strategic priorities, which include investments in its people and areas of digital products, technology operations and merchant solutions to position the company for long-term sustainable growth. This may be reflected in higher expense levels in the to-be-reported quarter.
We expect to see higher client incentives led by contract signings in Europe that got delayed from the fiscal second quarter to the third. An increase in client incentives is expected to weigh on earnings per share.
Given the FIFA World Cup and some seasonality in personnel costs in the fiscal third quarter, coupled with the ramp-up of investment initiative, the company expects double-digit expense growth to continue.
A decline in tax rate as a result of the Tax Reforms and Jobs Act will aid margins. Share repurchases made by the company will further boost its bottom line.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 8.4%. This is depicted in the chart below:
Our proven model does not conclusively show that Visa is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1, 2 or 3 for this to happen. But that is not the case here as you will see below.
Earnings ESP: Visa has an Earning ESP of -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Visa carries a Zacks Rank #3 (Hold), a negative Earnings ESP makes our surprise prediction difficult.
Other Stocks That Warrant a Look
Here are some companies that you may also consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Mastercard Incorporated (MA - Free Report) is expected to report second-quarter earnings on Jul 26. This Zacks #3 Ranked stock has an Earnings ESP of +0.58%.
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.67% and a Zacks Rank #2. The company is expected to report second-quarter earnings results on Jul 26.
Global Payments Inc. (GPN - Free Report) is expected to report second-quarter earnings on Aug 2. This Zacks #3 Ranked stock has an Earnings ESP of +0.15%.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Will Revenue Growth Aid Visa's (V) Earnings This Season?
Visa Inc. (V - Free Report) is scheduled to announce fiscal third-quarter 2018 results on Jul 25, after the closing bell. Its quarterly revenues and earnings are expected to improve year over year.
The company is expected to benefit from a strong global economy, which is likely to aid payments’ volume growth.
Last quarter, Visa’s earnings beat the Zacks Consensus Estimate by 9.9%. Also, the bottom line improved 25.6% year over year. Results were driven by continued growth in payments volume, cross-border volume and processed transactions.
Factors Likely to Impact Q3 Results
Visa’s fiscal third-quarter results are likely to be driven by higher revenues from growth of key business drivers such as payments volume, cross border volume and process transactions.
The company is likely to report an increase in service revenues, a component of total revenues which is recognized based on payments volumes in the prior quarter. Payments volume in the fiscal second quarter was up 11%. The Zacks Consensus Estimate for Service revenues stands at $2.27 billion, up 16.6% year over year.
Healthy economies around the world and growth and acceptance of electronic and mobile commerce, especially in developed countries, have likely led to an increase in processed transactions, which should drive Data Processing revenues. The Zacks Consensus Estimate for the same is $2.28 billion, up 15% year over year.
High gas prices and increased spending in retailare likely to have buoyed Visa’s total payments’ volumes. The Zacks Consensus Estimate indicates an increase of 12.3% to $2.09 billion in the fiscal second quarter.
Growth of inbound commerce into the United States should be affected by a strengthening dollar, which should be partially offset by initiatives to grow cross-border volume. A stressed cross-border business and adverse foreign exchange should have weighed on revenues from International operations.
Visa is making significant investments in its business initiatives and strategic priorities, which include investments in its people and areas of digital products, technology operations and merchant solutions to position the company for long-term sustainable growth. This may be reflected in higher expense levels in the to-be-reported quarter.
We expect to see higher client incentives led by contract signings in Europe that got delayed from the fiscal second quarter to the third. An increase in client incentives is expected to weigh on earnings per share.
Given the FIFA World Cup and some seasonality in personnel costs in the fiscal third quarter, coupled with the ramp-up of investment initiative, the company expects double-digit expense growth to continue.
A decline in tax rate as a result of the Tax Reforms and Jobs Act will aid margins. Share repurchases made by the company will further boost its bottom line.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 8.4%. This is depicted in the chart below:
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. Price, Consensus and EPS Surprise | Visa Inc. Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively show that Visa is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1, 2 or 3 for this to happen. But that is not the case here as you will see below.
Earnings ESP: Visa has an Earning ESP of -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Visa carries a Zacks Rank #3 (Hold), a negative Earnings ESP makes our surprise prediction difficult.
Other Stocks That Warrant a Look
Here are some companies that you may also consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Mastercard Incorporated (MA - Free Report) is expected to report second-quarter earnings on Jul 26. This Zacks #3 Ranked stock has an Earnings ESP of +0.58%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.67% and a Zacks Rank #2. The company is expected to report second-quarter earnings results on Jul 26.
Global Payments Inc. (GPN - Free Report) is expected to report second-quarter earnings on Aug 2. This Zacks #3 Ranked stock has an Earnings ESP of +0.15%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>