Then with this company, so Visa generates revenue in a couple of ways. It takes a percentage of the payment volume moving through its network. For that reason it’s important to pay attention to payments volume and the number of transactions. When these transactions are occurring cross-border, there’s an additional fee assessed. Payments volume was $2.8 trillion for the quarter; that was up 19%.
See our report’s 7 new picks today, absolutely FREE. In the quarter under review, the company bought back shares worth $2.2 billion. A month has gone by since the last earnings report for Visa (V Quick QuoteV – Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500. Visa is ranked No. 3 in IBD’s industry group ranking of credit card and payment processors, behind No. 1 Shift4Payments (FOUR). On March 29, Visa said it would become the first major payments network to settle transactions in USD Coin, a stablecoin backed by the U.S. dollar, over Ethereum.
ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. Highly rated companies in IBD’s payment processing group include Square (SQ) and PayPal (PYPL). Visa’s other established rivals include Mastercard and American Express (AXP). Digital payments — fueled by the rise of 5G networks — are a growth opportunity. Visa’s real-time push in payments technology has seen robust growth during the pandemic. Consumers and travelers are eager to put Covid in the rear-view mirror, but inflation is eating into disposable income and recession fears loom.
Despite the recent improvement, the transaction volumes are still likely to be lower than the year-ago period. While the company managed to outperform the consensus estimates of earnings and revenues in its first-quarter FY2021 results (FY Oct-Sept), the same trend dominated its revenues. It reported net revenues of $5.7 billion, which was 6% less than the previous year. Esports stocks This could be attributed to a 28% drop in international transaction revenues, partially offset by a 5% y-o-y growth in the services segment and a 6% increase in data processing revenues. Notably, client incentives as a % of revenues increased from 28.9% in the year-ago period to 32.7% in Q1. The payments giant is very sensitive to changes in consumer spending levels.
Visa Inc. Cl A stock rises Friday, outperforms market
Entities needing financial payment processing infrastructure can enroll in VisaNet and issue Visa-branded cards and services to their clients and customers. And, again, valuation does look like a bit of a concern, particularly in a market that seems rattled this week. V stock is trading at ~28x EPS and a similar multiple to FY18 free cash flow guidance. The rise in operating expenses, which could limit expansion of the company’s already-enormous operating margins in the high-60% range, might have be enough to lead some investors to take profits. Also, Visa and Mastercard have less exposure to interest-rate risk.
Visa’s stock has almost reached the level it was at before the drop in February due to the coronavirus outbreak becoming a pandemic. However, in reality, demand and revenues will likely be lower than last year, which seems to make it fully valued. The Motley Fool has positions in and recommends Visa. Following the modest gains, Mastercard posted its highest-ever closing share price of $414, while Visa’s $247 is also the top on record. The higher fees will force merchants to shell out $502 million more per year, payments consulting firm CMSPI estimated to the paper.
Why Visa Stock Just Dropped 4.5%
Visa Inc. is a US-based multinational financial services company formed from a consortium of US banks. It is the 2nd largest payment processor globally and the leading payment processor outside China. Its market share in 2021 was roughly 50% of global transaction volume x-China. Transactions are processed in 1 of 4 hardened data centers in key regions worldwide.
But just to provide a little context, that is up 23% from 2019. They reported earnings yesterday after the market closed. If you check the stock price today it’s down about 7%, so something went wrong. So for Q4, revenue came in at $6.6 billion and that was up 29%. Same thing on the bottom line, earnings per share of $1.65, up 70%.
Visa Expected to Log Higher 3Q Earnings, Revenue — Earnings Preview
It offers debit cards, credit cards, prepaid products, commercial payment solutions, and global automated teller machines (ATMs). The company was founded by Dee Hock in 1958 and is headquartered in San Francisco, CA. Then just to add a little bit more context on there, each month Visa reports the spending momentum and has a number of the Spending Momentum Index and that has been falling. This tracks consumer spending and it was up in July and then up-selling August fell again in September. That could be a headwind for the company coming into the first quarter of fiscal 2022. On the flip side, the U.S. is set to reopen borders to international travelers on the 8th of November, so that could be a tailwind.
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- U.S. payments volume grew 5% year over year in May, with credit card usage up 5% and debit 6%.
- Additionally, Visa’s operating expenses as a % of net revenues increased from 33% to 37.5% in the quarter.
- Shares earn an IBD Composite Rating of 94 out of a best-possible 99.
Our dashboard “What Factors Drove 49% Change In Visa Stock Between 2018-End And Now? Visa’s revenues of $21.8 billion in 2020 were 5% below the 2019 figure. This could mainly be attributed to lower cross-border transaction volumes. Further, the company is very sensitive to changes in consumer spending levels, which suffered in 2020 due to the impact of the Covid-19 crisis and economic slowdown.
This could be attributed to a 19% drop in international transaction revenues, partially offset by an 8% y-o-y growth in the services segment, and an 11% increase in data processing revenues. This means that both payment volumes and the number of processed transactions have increased in the quarter on a year-on-year basis, however, the cross-border volume has suffered. Additionally, Visa’s operating expenses as a % of net revenues increased from 33% to 37.5% in the https://investmentsanalysis.info/ quarter. Although Visa’s Q4 results were higher than the consensus estimates for earnings and revenues, its net revenues of $5.1 billion were 17% less than the previous year. This could be attributed to a 38% drop in international transaction revenues followed by a 13% drop in services revenues. The payments giant derives around 27% of its revenues from the international transactions segment, which has suffered the most due to lockdown restrictions and travel bans.
As far as the headline numbers go, the sell-off in Visa stock looks unjustified. Revenue rose 9%, roughly a half-point faster than Street analysts predicted. Adjusted earnings-per-share of $1.08 rose 26% year-over-year, coming in $0.10 better than consensus; 9 points of growth came from U.S. tax reform, and a weaker dollar added another point. Still, organic EPS increased 16% year-over-year — a very solid growth rate. Payments volume of Visa on a constant-dollar basis climbed 34% year over year in the third quarter.