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Will Visa (V) Q4 Earnings Reflect Higher Payments' Volumes?

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We expect to see an increase in payments volumes, a primary driver of service revenues for Visa Inc. (V - Free Report) . It is to be noted that service revenues are recognized on a lag basis. This means that the fourth quarter data will result in service revenues for the first quarter of fiscal 2019.

With economic conditions generally healthy in most of the world, Visa should see an increase in payments volumes, which should be driven by higher credit and debit payment volume. Total Payments Volumes in the fourth quarter is expected to be $2.14 trillion up 10.7% year over year.

Visa’ payments volumes comes from six regions — United States, Asia Pacific, Canada, CEMEA, Europe and LAC.

The United States, by far the largest of Visa’s six regions, has a Zacks Consensus Estimate of 10.2% increase in payment volume to $921 billion. Of that, $496 billion should be driven by credit cards, up 10.5%, and $425 billion by debit cards, reflecting a 9.5% increase. The growth in U.S. payments volumes should be primarily from increasing adoption of Visa Direct, the company’s near real-time payment service for debit cards.

Within Asia-Pacific, India should see growth as demonetization drive and move to a cashless society have led to volume growth for Visa. Business in Thailand should gain from the recent launch of Visa’s debit network in the region. Australia should see impressive payment volume growth from successful portfolio migration tied to significant long-term exclusive contracts struck with existing clients as well as the company’s continued growth momentum in both debit and contactless. The Zacks Consensus Estimate for payment volumes for Asia-Pacific is $485 billion, up 10% year over year.

In Europe, payments’ volumes should gain from the Visa Europe acquisitions completed a couple of years ago. Visa’s efforts to migrate debit business to higher-fee credit business in markets like Italy, Germany and the Nordic countries, should have driven payments volumes from these regions.

Other than payments volumes, processed transactions, cross-border volume, should aid revenue growth. (Read more: Will Higher Revenues Help Visa to Beat on Earnings in Q4?)

Visa carries a Zacks Rank #3 (Hold). Some stocks in the same space that are poised to beat earnings estimates in the July-September quarter are:

Discover Financial Services (DFS - Free Report) with an Earnings ESP of +0.23% and a Zacks Rank #2 (Buy). 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 (Strong Buy) stocks here.

Cardtronics PLC (CATM - Free Report) having 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. (EVOP - Free Report) with an Earnings ESP of +2.33% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 7.

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