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Will Higher Transactions Processed Aid Visa (V) Q1 Earnings?

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Growth in the number of transactions processed, one of the key revenue drivers for Visa Inc. V, is likely to have benefited its first-quarter fiscal 2020 performance.

Data processing revenues consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the company's clients globally. Number of processed transactions drives Visa’s Data processing revenues, which formed nearly 35% of its total revenues in fiscal 2019.

So, let’s check how processed transactions might have impacted the company’s performance in the to-be-reported quarter. Click here to know how the company’s overall first-quarter fiscal 2020 performance is expected to be.

Let’s Delve Deeper

In fiscal 2019, revenues from Data Processing increased 14% to $10.3 billion on 11% growth in transactions processed.

The Zacks Consensus Estimate for revenues from this business line is pegged at $2.85 billion, indicating an increase of 15.2% year over year on an expected 12.5% improvement in processed transactions to 49.9 billion.
Region wise, Visa’s transaction processed is likely to have benefited from Europe (expected to have climbed 6%), Asia Pacific (5.6%), CEMEA (24.7%), Lac (9.3%), Canada (7.1%) and the United States (8.6%).

The number of transactions processed is expected to have risen in the quarter under review, as in the past few quarters, due to the ongoing worldwide shift to electronic payments.

Massive investments in technology helped the company to process higher transactions every quarter and the same is likely to have continued in the fiscal first quarter.

Growing acceptance of its products and expansion of its merchant network are likely to drive the number of transactions processed. At the end of 2019, the company had more than 61 million physical merchant locations, up 14% from 2018. Notably, merchant location is the physical location at which transaction takes place.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for earnings per share is pegged at $1.46, which suggests a 12.3% increase from the year-ago quarter’s reported number. Also, the consensus estimate for sales of $6.06 billion indicates a rise of 10.1%.

Visa Inc. Price and EPS Surprise

Visa carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Here are a few finance stocks expected to beat earnings estimates this season:

Global Payments Inc. GPN has an Earnings ESP of +3.15% and a Zacks Rank of 2 (Buy).

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Fidelity Information Services, Inc. FIS has an Earnings ESP of +0.45% and a Zacks Rank #2.

Square, Inc. (SQ - Free Report) has an Earnings ESP of +6.14% and a Zacks Rank #3.

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