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Can Visa's (V) Q2 Earnings Beat Estimates on Higher Volumes?
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Visa Inc. (V - Free Report) is set to continue its earnings beat streak in the fiscal second quarter of 2023, the results of which are set to be released on Apr 25, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fiscal second-quarter 2023 earnings per share of $1.97 has witnessed one upward revision and no downward movement in the past week. The estimate is indicative of a 10.1% increase from the year-ago reported figure. Our estimate of $1.92 per share indicates 7.2% year-over-year growth. Visa beat earnings estimates in all the trailing four quarters, delivering an average of 8.6%. This is depicted in the graph below.
The Zacks Consensus Estimate for revenues is pegged at $7.7 billion, suggesting a 7.7% jump from the year-ago reported figure, whereas our estimate predicts a 5.7% increase.
What the Quantitative Model Suggests
Our proven model predicts an earnings beat for Visa this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +0.58%. The Most Accurate Estimate is currently pegged at $1.98 per share, higher than the Zacks Consensus Estimate of $1.97. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Visa currently holds a Zacks Rank #3.
Before we get into what to expect in the to-be-reported quarter in detail, let’s see how the company performed in the last quarter.
Q1 Earnings Rewind
In the last reported quarter, the payments technology company’s adjusted earnings per share of $2.18 beat the Zacks Consensus Estimate by 8.5%, primarily due to steady domestic volumes and transactions, coupled with a continued rebounding cross-border travel. Growing net flows and value-added services also contributed to the upside. Other additional tailwinds to its quarterly results included those of high currency volatility and lower-than-expected client incentives.
Rising travel and entertainment-related spending are expected to have driven Visa’s results in the fiscal second quarter. The growth in the adoption of digital payments is expected to have continued in the quarter under review.
The Zacks Consensus Estimate for total volume, which consists of cash volume and payments volume (the primary lever of service revenues), indicates an increase of 4.8% from the year-ago period. Our estimate indicates a 2.7% increase in the metric for the quarter under review.
As the company draws revenues as a set percentage of total transaction value every time a customer makes payments with a debit/credit card, higher spending means more revenues in the form of transaction processing fees. The consensus mark for total payments transactions indicates a 5.9% year-over-year increase, while our estimate suggests a 7.9% jump. We expect the metric for U.S. operations alone to jump 8.6% year over year.
With the growth in payments volume and processed transactions, Visa’s operating efficiency is expected to have improved in second-quarter fiscal 2023.
The Zacks Consensus Estimate for data processing revenues indicates 7.6% year-over-year growth in the fiscal second quarter, whereas our estimate predicts a 7.8% increase. Also, the consensus mark for service revenues predicts a 3.3% year-over-year increase, whereas our estimate indicates 2.8% growth.
The factors stated above are expected to have positioned the company for year-over-year growth and an earnings beat. However, rising expenses are likely to have partially offset the positive impact of higher volumes.
We expect adjusted total operating expenses for the quarter under review to increase 12.4% year over year due to increased Personnel, Network and Processing, Marketing and Professional Fees expenses.
Other Stocks That Warrant a Look
Here are some other companies from the broader Business Services space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Palantir Technologies’ bottom line for the to-be-reported quarter indicates 100% year-over-year growth and remained stable over the past week. Furthermore, the consensus mark for PLTR’s revenues indicates a 13.1% increase from a year ago.
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +40.88% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which suggests a 166.7% year-over-year jump. FOUR beat earnings estimates in all the past four quarters, with an average surprise of 21.5%.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +2.09% and a Zacks Rank of 3.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $2.90 per share, indicating 0.4% year-over-year growth. SPGI beat earnings estimates in two of the past four quarters and missed twice, with an average surprise of 0.2%.
Image: Bigstock
Can Visa's (V) Q2 Earnings Beat Estimates on Higher Volumes?
Visa Inc. (V - Free Report) is set to continue its earnings beat streak in the fiscal second quarter of 2023, the results of which are set to be released on Apr 25, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fiscal second-quarter 2023 earnings per share of $1.97 has witnessed one upward revision and no downward movement in the past week. The estimate is indicative of a 10.1% increase from the year-ago reported figure. Our estimate of $1.92 per share indicates 7.2% year-over-year growth. Visa beat earnings estimates in all the trailing four quarters, delivering an average of 8.6%. This is depicted in the graph below.
Visa Inc. Price and EPS Surprise
Visa Inc. price-eps-surprise | Visa Inc. Quote
The Zacks Consensus Estimate for revenues is pegged at $7.7 billion, suggesting a 7.7% jump from the year-ago reported figure, whereas our estimate predicts a 5.7% increase.
What the Quantitative Model Suggests
Our proven model predicts an earnings beat for Visa this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +0.58%. The Most Accurate Estimate is currently pegged at $1.98 per share, higher than the Zacks Consensus Estimate of $1.97. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Visa currently holds a Zacks Rank #3.
Before we get into what to expect in the to-be-reported quarter in detail, let’s see how the company performed in the last quarter.
Q1 Earnings Rewind
In the last reported quarter, the payments technology company’s adjusted earnings per share of $2.18 beat the Zacks Consensus Estimate by 8.5%, primarily due to steady domestic volumes and transactions, coupled with a continued rebounding cross-border travel. Growing net flows and value-added services also contributed to the upside. Other additional tailwinds to its quarterly results included those of high currency volatility and lower-than-expected client incentives.
Now, let’s see how things have shaped up prior to the fiscal second-quarter 2023 earnings announcement.
Factors Driving Better-Than-Expected Q2 Earnings
Rising travel and entertainment-related spending are expected to have driven Visa’s results in the fiscal second quarter. The growth in the adoption of digital payments is expected to have continued in the quarter under review.
The Zacks Consensus Estimate for total volume, which consists of cash volume and payments volume (the primary lever of service revenues), indicates an increase of 4.8% from the year-ago period. Our estimate indicates a 2.7% increase in the metric for the quarter under review.
As the company draws revenues as a set percentage of total transaction value every time a customer makes payments with a debit/credit card, higher spending means more revenues in the form of transaction processing fees. The consensus mark for total payments transactions indicates a 5.9% year-over-year increase, while our estimate suggests a 7.9% jump. We expect the metric for U.S. operations alone to jump 8.6% year over year.
With the growth in payments volume and processed transactions, Visa’s operating efficiency is expected to have improved in second-quarter fiscal 2023.
The Zacks Consensus Estimate for data processing revenues indicates 7.6% year-over-year growth in the fiscal second quarter, whereas our estimate predicts a 7.8% increase. Also, the consensus mark for service revenues predicts a 3.3% year-over-year increase, whereas our estimate indicates 2.8% growth.
The factors stated above are expected to have positioned the company for year-over-year growth and an earnings beat. However, rising expenses are likely to have partially offset the positive impact of higher volumes.
We expect adjusted total operating expenses for the quarter under review to increase 12.4% year over year due to increased Personnel, Network and Processing, Marketing and Professional Fees expenses.
Other Stocks That Warrant a Look
Here are some other companies from the broader Business Services space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
Palantir Technologies Inc. (PLTR - Free Report) has an Earnings ESP of +7.69% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palantir Technologies’ bottom line for the to-be-reported quarter indicates 100% year-over-year growth and remained stable over the past week. Furthermore, the consensus mark for PLTR’s revenues indicates a 13.1% increase from a year ago.
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +40.88% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which suggests a 166.7% year-over-year jump. FOUR beat earnings estimates in all the past four quarters, with an average surprise of 21.5%.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +2.09% and a Zacks Rank of 3.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $2.90 per share, indicating 0.4% year-over-year growth. SPGI beat earnings estimates in two of the past four quarters and missed twice, with an average surprise of 0.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.