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Across-the-Board Increases Could Be Seen When Visa Reports

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Oct. 19 2016, Updated 8:07 a.m. ET

September quarter

Visa (V) is expected to post EPS (earnings per share) of $0.73 for the September 2016 quarter compared to $0.62 in the September 2015 quarter. For 2016, analysts expect EPS of $2.79, compared to $2.62 in 2015, reflecting implied growth of 6.5%.

The company has been strong in the domestic market as it has consistently increased penetration through partnerships as well as retail clients. In international markets, Visa is expanding through the Visa Europe acquisition and strong growth in Asian markets.

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In the June 2016 quarter, Visa (V) posted adjusted net earnings of $1.6 billion, or $0.69 per unit. This is compared to $0.67 per unit in the previous quarter and $0.74 per unit in the June 2015 quarter. The company’s revenues stood at $3.6 billion, up 3% when compared to the June 2015 quarter. Its adjusted operating margin remained stable at 68%.

Visa also extended its share repurchase program authorization by $5.0 billion to $7.3 billion, which is targeted to offset dilution from the preferred stock issuance. The company plans to use its reserves to fund its buyback program.

The payment processing industry is focusing on technology-backed solutions, targeting online purchases, and mobile payments in order to attract more customers and spending. Visa is deploying funds in these areas, especially focusing on mobile payment solutions.

Here’s how some of Visa’s peers in the industry performed with their respective quarterly earnings:

  • Fidelity National Information Services (FIS): beat estimates
  • Mastercard (MA): beat estimates
  • American Express (AXP): beat estimates

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

Financial services

Visa provides numerous payment solutions that partnered companies can provide to their account holders. The company provides payment products including credit, debit, and prepaid cards. Because Visa is not a bank, it doesn’t issue cards, extend credit, or set rates and fees for Visa product account holders.

In this series, we’ll look at Visa’s expected revenues, balance sheet strength, Europe merger, spending, dividends, initiatives, and valuations.

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