Can Visa (V) Beat Q3 Earnings Estimates on Better Business? - Analyst Blog

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Global electronic payment processing giant - Visa Inc. ( V ) 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 this announcement.

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.

Zacks ESP : Visa has a positive Zacks ESP. That is because Expected Surprise Prediction or Earnings ESP , 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%.

Zacks Rank : 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 Earnings?

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 shareholder value.

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 2013.

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: 

Qiwi Plc ( QIWI ) has Earnings ESP of 4.8% and a Zacks Rank #1 (Strong Buy).

Everest Re Group Ltd. ( RE ) has Earnings ESP of +6.0% and a Zacks Rank #2 (Buy).

Moody's Corp. ( MCO ) has Earnings ESP of +6.1% and a Zacks Rank #3 (Hold).


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VISA INC-A (V): Free Stock Analysis Report

QIWI PLC-ADR (QIWI): Free Stock Analysis Report


MOODYS CORP (MCO): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: V , QIWI , MCO , RE

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