Visa Inc.’s (NYSE:V) fiscal second-quarter results should reflect payment transaction growth led by higher consumer spending fuelled by a strong economy. Continued growth of checks and digital methods of payments supported the increase in payment transaction.
The Zacks Consensus Estimate for total payment transaction is 37.51 billion, up 10.6% year over year. This should be driven by payments transaction growth from Asia Pacific, Canada, Cemea, Lac, U.S.A., the Zacks Consensus Estimate for which is pegged at 6.13 billion, 809 million, 3.62 billion, 3.07 billion and 15.7 billion, respectively, reflecting year-over-year increase of 11.2%, 12.4%, 25.1%, 1.9% and 8%.
High gas prices and increased spending in retail should have buoyed Visa’s total payments volumes which is expected to grow by 11.4% to $1.93 billion in the fiscal second quarter as per the Zacks Consensus Estimate.
Visa should report increase in revenues from growth of key business drivers such as payments volume, cross border volume and process transactions. Visa revenues have grown consistently over the past several years. We strongly believe that the company should retain its revenue momentum in the to-be quarters on the back of its strong market position and attractive core business that continues to be driven by new deals, renewed agreements, accretive acquisitions, increasing spending via cards, shift to digital form of payments and expansion of service offerings.
Results should also see an upside from the Visa Europe acquisition. The deal has been accretive to the company, having contributed to its top line by bolstering payments volume, cross-border volume and processed transactions. The deal contributed to fiscal 2017 EPS by mid single digits and management expects an addition of high single digits to fiscal 2018 EPS. Part of it should be accrued in the to-be reported quarter.
The company’s share buyback activity should provide an extra cushion to its bottom line. (Read more: Will Visa's Q2 Earnings Benefit From Higher Revenues?).
Zacks Rank Other Stocks to Consider
Visa carries a Zacks Rank #3 (Hold). Its Earnings ESP of +1.62% along with a favorable Zacks Rank indicates chances of it beating the Zacks Consensus Estimate. Here are some other companies from the same space that are poised for a beat based on our model.
Mastercard Incorporated (NYSE:MA) is expected to report first-quarter 2018 earnings on May 2. The company has an Earnings ESP of +0.83% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Total System Services, Inc. (NYSE:TSS) has an Earnings ESP of +1.01% and a Zacks Rank #3. The company is expected to report first-quarter earnings results on Apr 24.
Worldpay, Inc. (NYSE:WP) has an Earnings ESP of +0.78% and a Zacks Rank #3. The company is expected to report first-quarter earnings results on May 10.
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Mastercard Incorporated (MA): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
Total System Services, Inc. (TSS): Free Stock Analysis Report
Vantiv, Inc. (WP): Free Stock Analysis Report
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