We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Higher Revenues Help Visa (V) to Beat on Earnings in Q4?
Read MoreHide Full Article
Visa Inc. (V - Free Report) is scheduled to announce fiscal fourth-quarter 2018 results on Oct 24, after the closing bell. Its quarterly revenues and earnings are expected to improve year over year.
Results are expected to benefit from growth in payments volume, cross-border volume and processed transactions.
U.S. consumer debit growth should have accelerated, fueled by positive macroeconomic conditions, Visa Direct, and rising gas prices.
Commercial volume has been accelerating steadily in the past three quarters, with gains across small business credit, and large and middle market programs. The trend should continue in the fiscal fourth quarter.
Bolstered by successful tax initiatives and U.S. tax reform, Visa projects adjusted EPS growth in the low 30% range for fiscal 2018. This will result in adjusted EPS growth of more than 60% since the end of fiscal 2016.
Factors Likely to Impact Q4 Results
Visa’s fiscal fourth-quarter results are likely to be driven by higher revenues from the 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 (on a lag basis) based on payments volumes in the prior quarter. Payments volume in the fiscal third quarter was up 11%. The Zacks Consensus Estimate for Service revenues stands at $2.36 billion, up 11.5% 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 $2.42 billion, up 17.2% year over year.
High gas prices and increased spending in retail are likely to have buoyed Visa’s total payments’ volumes. The Zacks Consensus Estimate indicates an increase of 10.7% to $2.14 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 might weigh on revenues from International operations. In the fiscal third quarter, cross-border growth on a constant dollar basis of 10% decelerated by 1 percentage point largely due to a stronger dollar.
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.
Also, client incentives — a contra revenue item — should be elevated in the fiscal fourth quarter due to some contract signing delays in the third quarter. The quarter should have witnessed higher client incentives due to these signing delays.
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.
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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Visa has an Earning ESP of -0.01%. 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, 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:
Discover Financial Services (DFS - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Oct 25.
Cardtronics PLC has an Earnings ESP of +3.2% and a Zacks Rank #1. The company is expected to report third-quarter earnings results on Nov 1.
EVO Payments, Inc. has an Earnings ESP of +2.33% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Will Higher Revenues Help Visa (V) to Beat on Earnings in Q4?
Visa Inc. (V - Free Report) is scheduled to announce fiscal fourth-quarter 2018 results on Oct 24, after the closing bell. Its quarterly revenues and earnings are expected to improve year over year.
Results are expected to benefit from growth in payments volume, cross-border volume and processed transactions.
U.S. consumer debit growth should have accelerated, fueled by positive macroeconomic conditions, Visa Direct, and rising gas prices.
Commercial volume has been accelerating steadily in the past three quarters, with gains across small business credit, and large and middle market programs. The trend should continue in the fiscal fourth quarter.
Bolstered by successful tax initiatives and U.S. tax reform, Visa projects adjusted EPS growth in the low 30% range for fiscal 2018. This will result in adjusted EPS growth of more than 60% since the end of fiscal 2016.
Factors Likely to Impact Q4 Results
Visa’s fiscal fourth-quarter results are likely to be driven by higher revenues from the 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 (on a lag basis) based on payments volumes in the prior quarter. Payments volume in the fiscal third quarter was up 11%. The Zacks Consensus Estimate for Service revenues stands at $2.36 billion, up 11.5% 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 $2.42 billion, up 17.2% year over year.
High gas prices and increased spending in retail are likely to have buoyed Visa’s total payments’ volumes. The Zacks Consensus Estimate indicates an increase of 10.7% to $2.14 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 might weigh on revenues from International operations. In the fiscal third quarter, cross-border growth on a constant dollar basis of 10% decelerated by 1 percentage point largely due to a stronger dollar.
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.
Also, client incentives — a contra revenue item — should be elevated in the fiscal fourth quarter due to some contract signing delays in the third quarter. The quarter should have witnessed higher client incentives due to these signing delays.
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.
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 and Consensus
Visa Inc. Price and Consensus | 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Visa has an Earning ESP of -0.01%. 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, 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:
Discover Financial Services (DFS - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Oct 25.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardtronics PLC has an Earnings ESP of +3.2% and a Zacks Rank #1. The company is expected to report third-quarter earnings results on Nov 1.
EVO Payments, Inc. has an Earnings ESP of +2.33% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>