Visa Inc. (V Quick QuoteV - Free Report) is set to continue its earnings beat streak in the fourth quarter of fiscal 2023, the results for which are expected to be released on Oct 24, after the closing bell.

What Do the Estimates Say?

The Zacks Consensus Estimate for fourth-quarter fiscal 2023 earnings per share of $2.23 has remained stable over the past week. The estimate is indicative of a 15.5% increase from the year-ago reported figure. Visa beat earnings estimates in all the trailing four quarters, delivering an average of 5.2%. This is depicted in the graph below.

The Zacks Consensus Estimate for revenues is pegged at $8.6 billion, suggesting a 9.8% jump from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts a likely 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, which is precisely the case here.

Earnings ESP: Earnings ESP for the company is currently +0.85%. The Most Accurate Estimate is currently pegged at $2.25 per share, higher than the Zacks Consensus Estimate of $2.23. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Visa currently carries 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.

Q3 Earnings Rewind

In the last reported quarter, the payments technology company’s adjusted earnings per share of $2.16 beat the Zacks Consensus Estimate by 2.4%, primarily on the back of higher payments, cross-border volumes and processed transactions. Steady cross-border travel growth and higher-than-expected data processing aided the results, partially offset by higher costs.

Now, let’s see how things have shaped up prior to the fourth-quarter fiscal 2023 earnings announcement.

Factors Driving Q4 Earnings

Visa's fiscal fourth-quarter results are anticipated to be fueled by the ongoing growth in travel and entertainment-related spending. Furthermore, the continuous adoption and popularity of digital payment methods are expected to have continued during the quarter, contributing to Visa's overall performance. The Zacks Consensus Estimate for fiscal fourth-quarter total Gross Dollar Volume indicates an increase of more than 6% from the year-ago period, whereas our model predicts 4.2% growth.

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 Zacks Consensus Estimate for fiscal fourth-quarter total processed transactions indicates 8.1% year-over-year growth, whereas our model predicts a 9% increase.

The consensus mark for total payments transactions indicates an 8.6% year-over-year increase, whereas our estimate suggests 8.3% growth. We expect the metric for U.S. operations alone to jump 8.2% year over year. Similarly, our model predicts early double-digit year-over-year growth in Asia Pacific, Latin America and Canada.

The Zacks Consensus Estimate for data processing revenues indicates 11.6% growth in the fiscal fourth quarter from the year-ago level of $3.8 billion, while our estimate predicts a 10.4% increase. Similarly, the consensus mark for service revenues suggests 12.5% year-over-year growth, whereas we expect the metric to grow around 14%.

Furthermore, the consensus estimate for international transaction revenues indicates 10.5% growth from a year ago, whereas our model predicts a 9.5% increase. Cross-border volume growth is expected to have aided the metric.

The factors stated above are expected to have positioned the company for year-over-year growth in the fiscal fourth quarter and an earnings beat. However, rising expenses and client incentives (a contra-revenue item) 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 almost 8% year over year due to increased Personnel and Professional Fees expenses. Our estimate for client incentives suggests that the metric will be close to $3.4 billion in the fiscal fourth quarter.

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:

FirstCash Holdings, Inc. (FCFS Quick QuoteFCFS - Free Report) has an Earnings ESP of +6.48% 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 FirstCash’s bottom line for the to-be-reported quarter is pegged at $1.39 per share, indicating 6.9% year-over-year growth. The estimate has witnessed one upward estimate revision over the past week against no movement in the opposite direction. Furthermore, the consensus mark for FCFS’ revenues is pegged at $776.7 million, suggesting 15.6% growth from a year ago.

PagSeguro Digital Ltd. (PAGS Quick QuotePAGS - Free Report) has an Earnings ESP of +1.96% and a Zacks Rank of 3.

The Zacks Consensus Estimate for PagSeguro’s bottom line for the to-be-reported quarter is pegged at 26 cents per share, which suggests an 8.3% year-over-year jump. The estimate remained stable over the past week. PAGS beat earnings estimates in all the past four quarters, with an average of 9.3%.

S&P Global Inc. (SPGI Quick QuoteSPGI - Free Report) has an Earnings ESP of +0.15% 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 $3.05 per share, indicating 4.1% year-over-year growth. SPGI beat earnings estimates in three of the past four quarters and met once, with an average surprise of 3.9%.

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