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Why Is Visa (V) Up 5.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Visa (V - Free Report) . Shares have added about 5.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Visa due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Visa Q3 Earnings Beat Estimates
Visa Inc. reported third-quarter fiscal 2020 earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 3.92%. However, the bottom line declined 23% year over year.
Further, net operating revenues of $4.8 billion surpassed the Zacks Consensus Estimate by 0.62%. Nevertheless, the top line fell 17% year over year.
Contraction in payments volume and processed transaction, and lower cross-border revenues primarily attributable to the COVID-19 pandemic has impacted the company’s results. However, the top line was partially driven by decline in client incentives, which is a contra revenue item.
Strong Financial Performance
On a constant-dollar basis, payments volume in the quarter was down 10% year over year. Processed transactions declined 13% from the prior-year quarter to 30.7 billion.
Visa’s cross-border volumes including transactions within Europe (which drives its international transaction revenues) plunged 37% year over year on a constant-dollar basis.
Service revenues remained flat year over year at $2.4 billion on lower payments volume. On a year-over-year basis, data processing revenues declined 5% to $2.5 billion and international transaction revenues plunged 44% to $1.1 billion. Other revenues fell 8% year over year to $314 million. Client incentives of $1.5 billion decreased 2% year over year.
Total operating expenses declined 5% year over year to $1.8 billion, primarily due to lower marketing, and general and administrative expenses.
Interest expense increased 10.9% year over year to $142 million.
Solid Balance Sheet
Cash and cash equivalents were $13.9 billion as of Jun 30, 2020, up 77.3% from the level as of Sep 30, 2019.
Total assets were $77.9 billion as of Jun 30, 2020, up 7.3% from the prior-year comparable period.
Share Buyback and Dividend Update
During the quarter, the company made share repurchases to the tune of $0.9 billion.
On Jul 20, 2020, the company declared a quarterly cash dividend of 30 cents per share, payable Sep 1, 2020 to its shareholders of record as of Aug 14, 2020.
Developments During the Quarter
On Apr 2, 2020, Visa issued fixed-rate senior notes worth $4 billion, the proceeds from which will be utilized for general corporate purposes.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Visa has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Visa has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Visa (V) Up 5.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Visa (V - Free Report) . Shares have added about 5.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Visa due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Visa Q3 Earnings Beat Estimates
Visa Inc. reported third-quarter fiscal 2020 earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 3.92%. However, the bottom line declined 23% year over year.
Further, net operating revenues of $4.8 billion surpassed the Zacks Consensus Estimate by 0.62%. Nevertheless, the top line fell 17% year over year.
Contraction in payments volume and processed transaction, and lower cross-border revenues primarily attributable to the COVID-19 pandemic has impacted the company’s results. However, the top line was partially driven by decline in client incentives, which is a contra revenue item.
Strong Financial Performance
On a constant-dollar basis, payments volume in the quarter was down 10% year over year. Processed transactions declined 13% from the prior-year quarter to 30.7 billion.
Visa’s cross-border volumes including transactions within Europe (which drives its international transaction revenues) plunged 37% year over year on a constant-dollar basis.
Service revenues remained flat year over year at $2.4 billion on lower payments volume. On a year-over-year basis, data processing revenues declined 5% to $2.5 billion and international transaction revenues plunged 44% to $1.1 billion. Other revenues fell 8% year over year to $314 million.
Client incentives of $1.5 billion decreased 2% year over year.
Total operating expenses declined 5% year over year to $1.8 billion, primarily due to lower marketing, and general and administrative expenses.
Interest expense increased 10.9% year over year to $142 million.
Solid Balance Sheet
Cash and cash equivalents were $13.9 billion as of Jun 30, 2020, up 77.3% from the level as of Sep 30, 2019.
Total assets were $77.9 billion as of Jun 30, 2020, up 7.3% from the prior-year comparable period.
Share Buyback and Dividend Update
During the quarter, the company made share repurchases to the tune of $0.9 billion.
On Jul 20, 2020, the company declared a quarterly cash dividend of 30 cents per share, payable Sep 1, 2020 to its shareholders of record as of Aug 14, 2020.
Developments During the Quarter
On Apr 2, 2020, Visa issued fixed-rate senior notes worth $4 billion, the proceeds from which will be utilized for general corporate purposes.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Visa has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Visa has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.