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Visa's 2017 Growth to Ride on Emerging Markets and US Spending

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Visa's 2017 Growth to Ride on Emerging Markets and US Spending PART 1 OF 9

Visa Expected to See Strong Performance in March 2017

2017 expected performance

Visa (V) has beaten estimates in five out of the past six quarters, reflecting a better-than-expected operating performance. The company is expected to post earnings per share (or EPS) of $0.79 for fiscal 2Q17 (ending March 31, 2017) and $3.32 for fiscal 2017, with an implied year-over-year growth of 16.9%. It’s expected to post earnings of $17.7 billion, a YoY growth of 17.6%.

Visa has seen increased spending and penetration through partnerships in and outside of the US. The company posted adjusted net earnings of $2.1 billion, or $0.86 per share, in fiscal 1Q17 as compared to $0.78 per share in fiscal 4Q16 and $0.69 per share in fiscal 1Q16. Excluding a one-time charge of $255 million in fiscal 1Q16, the company saw a 23% rise in net income.

Visa Expected to See Strong Performance in March 2017

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In fiscal 1Q17, Visa’s net operating revenue stood at $4.5 billion, a rise of 25% on a year-over-year basis. The growth was due to its inclusion of the Visa Europe business, higher processed transactions, and payment volumes. Visa has achieved higher operating margins of 65%–69% over the past few quarters.

Here’s how some of Visa’s peers in the industry have fared in terms of their respective quarterly earnings:

  • Fidelity National Information Services (FIS): not yet released
  • American Express (AXP): missed estimates
  • MasterCard (MA): beat estimates

Together, these companies form 2.3% of the Technology Select Sector SPDR ETF (XLF).

Beating competition

Visa offers a wide variety of payment processing solutions. However, the company isn’t a commercial bank. It doesn’t provide debt or set interest rates and fees for Visa product account holders.

In this series, we’ll study Visa’s revenues, payment volumes, balance sheet strength, dividends, processed transactions, and valuations.

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