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Will Visa's (V) Beat Streak be Sustained in Q2 Earnings?
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Visa Inc. (V - Free Report) fiscal Q2 results are likely to reflect higher data processing, services and other revenue growth, partly offset by lower international transaction services revenues.
In the last reported quarter, the company’s earnings of $1.42 per share beat the Zacks Consensus Estimate by 11.81%. However, the bottom line declined 2.7% year over year.
Let’s see how things have been shaping the company’s earnings before its announcement.
The company’s key revenue drivers, such as payments volume and payment transactions are expected to have improved in the to-be-reported quarter on the back of a gradual recovery in consumer spending.
Aided by the accelerated shift to e-commerce and digital payments in face-to-face transactions, the domestic business (U.S) is likely to have reaped gains. The company already announced 11% and 9% growth in U.S. payments volumes for January and February, respectively.
Management also stated that in March 2021, the company experienced a moderate improvement in U.S. payments volume. The Zacks Consensus Estimate for payments volume in the United .States is pegged at $1.08 trillion, indicating 10% growth from the year-ago quarter’s reported figure.
Payment transactions largely track domestic payment volume growth and therefore the metric is likely to show an uptick in the upcoming quarterly release. The Zacks Consensus Estimate for total number of payment transactions is pegged at 18.62 billion, implying a 5.6% increase from the year-ago quarter's reported figure.
Cross-border volumes are likely to have remained under pressure in the to-be-reported quarter. The company informed that cross-border volumes declined 21% and 16% in January and February, respectively. Consequently, international transaction revenues, which are dependent on cross-border volumes, are likely to have declined in the same period. The Zacks Consensus Estimate for international transaction revenues is pegged at $1.47 billion, indicating a 20% decrease from the year-ago reported figure.
Data processing revenues, the largest revenue driver, are likely to have improved, led by service growth, partially offset by the mix shift away from higher-yielding cross-border transactions. The Zacks Consensus Estimate for data processing revenues stands at $2.9 billion, implying 7.5% growth from the prior-year reported number.
Service revenues are recognized on the basis of payment volumes in the preceding quarter. Since in the previous quarter, payment volumes rose 5%, therefore service revenues are also likely to be higher in the impending quarterly result. The Zacks Consensus Estimate for service revenues stands at $2.8 billion, hinting at 7% growth from the year-ago reported number.
However, total operating expenses are likely to have declined, primarily on lower marketing, and general and administrative expenses.
Management stated that in the to-be-reported quarter, client incentives, a contra revenue item, are likely to have been one point above the high end of the 25.5-26.5% range that it expects for the year. This increase can be attributed to a few large deals moved from the first to the second quarter. Notably, many clients did not meet certain volume thresholds in the calendar year 2020 and therefore, could not earn corresponding incentives. So, when volume rebounds in 2021, clients will automatically hit growth thresholds and earn these incentives. The impact of renewals is also expected to boost client incentives.
Earnings & Revenue Expectations
The Zacks Consensus Estimate for Visa’s second-quarter fiscal 2021 earnings of $1.27 per share implies an 8.63% deterioration from the prior-year period’s reported number. Likewise, the consensus estimate for sales of $5.56 billion suggests a 4.99% 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 four quarters, the average being 5.36%. This is depicted in the chart below:
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 surprise, which is the case here.
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 +0.87%.
Zacks Rank: Visa currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:
EVO Payments, Inc. has an Earnings ESP of +16.67% and is presently Zacks #3 Ranked.
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +6.77% and a Zacks Rank #2, presently.
Oportun Financial Corporation (OPRT - Free Report) has an Earnings ESP of +60.00% and a Zacks Rank of 2 at present.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021? Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Will Visa's (V) Beat Streak be Sustained in Q2 Earnings?
Visa Inc. (V - Free Report) fiscal Q2 results are likely to reflect higher data processing, services and other revenue growth, partly offset by lower international transaction services revenues.
In the last reported quarter, the company’s earnings of $1.42 per share beat the Zacks Consensus Estimate by 11.81%. However, the bottom line declined 2.7% year over year.
Let’s see how things have been shaping the company’s earnings before its announcement.
The company’s key revenue drivers, such as payments volume and payment transactions are expected to have improved in the to-be-reported quarter on the back of a gradual recovery in consumer spending.
Aided by the accelerated shift to e-commerce and digital payments in face-to-face transactions, the domestic business (U.S) is likely to have reaped gains. The company already announced 11% and 9% growth in U.S. payments volumes for January and February, respectively.
Management also stated that in March 2021, the company experienced a moderate improvement in U.S. payments volume. The Zacks Consensus Estimate for payments volume in the United .States is pegged at $1.08 trillion, indicating 10% growth from the year-ago quarter’s reported figure.
Payment transactions largely track domestic payment volume growth and therefore the metric is likely to show an uptick in the upcoming quarterly release. The Zacks Consensus Estimate for total number of payment transactions is pegged at 18.62 billion, implying a 5.6% increase from the year-ago quarter's reported figure.
Cross-border volumes are likely to have remained under pressure in the to-be-reported quarter. The company informed that cross-border volumes declined 21% and 16% in January and February, respectively. Consequently, international transaction revenues, which are dependent on cross-border volumes, are likely to have declined in the same period. The Zacks Consensus Estimate for international transaction revenues is pegged at $1.47 billion, indicating a 20% decrease from the year-ago reported figure.
Data processing revenues, the largest revenue driver, are likely to have improved, led by service growth, partially offset by the mix shift away from higher-yielding cross-border transactions. The Zacks Consensus Estimate for data processing revenues stands at $2.9 billion, implying 7.5% growth from the prior-year reported number.
Service revenues are recognized on the basis of payment volumes in the preceding quarter. Since in the previous quarter, payment volumes rose 5%, therefore service revenues are also likely to be higher in the impending quarterly result. The Zacks Consensus Estimate for service revenues stands at $2.8 billion, hinting at 7% growth from the year-ago reported number.
However, total operating expenses are likely to have declined, primarily on lower marketing, and general and administrative expenses.
Management stated that in the to-be-reported quarter, client incentives, a contra revenue item, are likely to have been one point above the high end of the 25.5-26.5% range that it expects for the year. This increase can be attributed to a few large deals moved from the first to the second quarter. Notably, many clients did not meet certain volume thresholds in the calendar year 2020 and therefore, could not earn corresponding incentives. So, when volume rebounds in 2021, clients will automatically hit growth thresholds and earn these incentives. The impact of renewals is also expected to boost client incentives.
Earnings & Revenue Expectations
The Zacks Consensus Estimate for Visa’s second-quarter fiscal 2021 earnings of $1.27 per share implies an 8.63% deterioration from the prior-year period’s reported number. Likewise, the consensus estimate for sales of $5.56 billion suggests a 4.99% 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 four quarters, the average being 5.36%. This is depicted in the chart below:
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 surprise, which is the case here.
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 +0.87%.
Zacks Rank: Visa currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:
EVO Payments, Inc. has an Earnings ESP of +16.67% and is presently Zacks #3 Ranked.
Intercorp Financial Services Inc. (IFS - Free Report) has an Earnings ESP of +6.77% and a Zacks Rank #2, presently.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oportun Financial Corporation (OPRT - Free Report) has an Earnings ESP of +60.00% and a Zacks Rank of 2 at present.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>