Global electronic payment processing giant -
) is scheduled to release its third-quarter of fiscal 2014
financial results after the closing bell on Jul 24.
In the last reported quarter, the company had delivered a 0.5%
positive earnings surprise, while the four-quarter trailing average
beat stands at 2.5%. Now let us see how things are shaping up for
Why a Likely Positive Surprise?
Our proven model shows that Visa is likely to beat earnings as
it has the required combination of two key components.
: Visa has a positive Zacks ESP. That is because Expected Surprise
, which represents the difference between the Most Accurate
estimate of $2.11 per share and the Zacks Consensus Estimate of
$2.09, is +0.96%.
: Visa has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank
#1, 2 and 3 have significantly higher chances of beating earnings.
Conversely, Sell-rated stocks (#4 and 5) are never considered going
into an earnings announcement.
The combination of Visa's Zacks Rank #2 and +0.96% ESP raise the
prospect of an earnings beat on Jul 24.
What is Driving the Better-than-Expected
Visa is likely to generate better-than-expected growth from its
diversified business portfolio, and benefit from its strong global
exposure and effective marketing efforts. Meaningful alliances and
technology upgrades initiatives within online merchant payment
services and prepaid card spaces that were executed during the
quarter, are also projected to drive growth.
Meanwhile, the new sanctions in Russia is not likely to affect
Visa's operations, thereby alleviating a major regulatory headwind
for the company. About 2% of annual revenues are generated from
Russia. Alongside, Visa continues to be debt-free, which augurs
decent liquidity and capital deployment, leading to incremental
Although headwinds such as expenses, currency fluctuations,
difficult comps and regulatory challenges from quite many
jurisdictions are reflected in the company's tepid guidance, Visa
is expected to exit fiscal 2014 on an optimistic note.
Excluding a 2% reduction due to negative impact of foreign
currency, Visa's top-line growth guidance is in low double-digits,
while its bottom-line is projected to grow in the mid-to-high teen
range in fiscal 2014, lower than 22% growth recorded in fiscal
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this quarter:
) has Earnings ESP of 4.8% and a Zacks Rank #1 (Strong Buy).
Everest Re Group Ltd.
) has Earnings ESP of +6.0% and a Zacks Rank #2 (Buy).
) has Earnings ESP of +6.1% and a Zacks Rank #3 (Hold).
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