) second-quarter fiscal 2014 (ended Mar 31, 2014) operating
earnings of $2.20 per Class A common share beat the Zacks
Consensus Estimate by a penny and outpaced the prior-year quarter
figure of $1.91 per share. Operating net income spiked 29% to
$1.38 billion from $1.07 billion in the year-ago quarter.
Including tax benefits from prior periods of $218 million in
the reported quarter and $201 million in the year-ago quarter,
reported net income stood at $1.6 billion or $2.52 per share
against $1.27 billion or $1.92 a
Alongside, total operating revenue for the reported quarter
stood at $3.16 billion, up 6.9% year over year but lagged the
Zacks Consensus Estimate of $3.2 billion. The year-over-year
uptick was driven by higher card spending and modest performance
across all segments. However, currency fluctuations in the U.S.
negated growth by 2%, while difficult comps are expected to
continue in the third-quarter of fiscal 2014.
revenues increased 6.8% year over year to $1.46 billion and are
recognized based on payments volume in the prior quarter. All
other revenue categories are recognized based on the current
revenues climbed 7.3% from the prior-year period to $1.23
revenues, which are driven by cross-border payments volume, rose
4.8% over the prior-year quarter to $871 million.
revenues, earned through Visa Europe's licensing fee, grew 4.6%
to $183 million.
, which is a contra-revenue item, came in at $587 million, and
accounted for about 15.6% of gross revenues.
On a constant dollar basis, payment volume increased 12% year
over year to $1.1 trillion. Total processed transactions carrying
the VisaNet brand increased 11% year over year to 15.4 billion.
Cross border volume, on a constant dollar basis, grew 8% over the
Meanwhile, total operating expenses edged up 1.5% year over
year to $1.12 billion. Consequently, Visa's operating income grew
10.1% to $2.05 billion, while operating margin escalated to 64.7%
from 62.9% in the year-ago period.
As of Mar 31, 2014, cash and cash equivalents as well as
trading and available-for-sale investment securities totaled
$3.49 billion, down from $4.26 billion as of Sep 30, 2013.
Nevertheless, long-term debt remained nil, while total assets
ascended to $37.26 billion from $35.96 billion at fiscal
2013-end. Total equity was $27.3 billion, up from $26.87 billion
as of Sep 30, 2013.
Further, Visa's operating cash flow surged to $3.47 billion at
the end of fiscal second-quarter 2014 against a cash outflow of
$1.18 billion recorded in the year-ago period.
Stock Repurchase Update
During the reported quarter, Visa repurchased about 5.1
million class A common shares for a total cost of $1.1
In Oct 2013, the board had sanctioned a new share repurchase
program worth $5.0 billion, while shares worth $3.0 billion were
available for buybacks at the end of Mar 2014.
On Apr 23, 2014, the board declared its quarterly dividend of
40 cents per share to class A common stock, payable on Jun 3,
2014, to the shareholders of record as on May 16.
On Mar 4, 2014, Visa paid a quarterly dividend of 40 cents per
share to the shareholders of record as on Feb 14.
Visa reiterated the financial outlook for fiscal 2014,
anticipating annual operating earnings per share to grow in
mid-to-high teens range. Annual net revenue growth is expected to
be within low double digits (10−11%), with an adverse foreign
currency impact of about 2%.
Meanwhile, the company reaffirmed annual operating margin of
low-60% range. Further, Visa expects client incentives within
16.5−17.5% of gross revenues. Additionally, annual free cash flow
is estimated to be around $5 billion in fiscal 2014, while tax
rate should be around 30%.
On Apr 16, arch rival
American Express Co.
) first-quarter 2014 operating earnings per share of $1.33. The
result outpaced both the Zacks Consensus Estimate of $1.30, and
the year-ago quarter figure of $1.15 a share. Improved cardmember
spending coupled with reduced expenses and loan loss provisions
) is slated to release its first-quarter 2014 earnings before the
opening bell on May 1. While Visa, AmEx and MasterCard carry a
Zacks Rank #3 (Hold), American Express, and peer,
Green Dot Corp.
), bear a Zacks Rank #2 (Buy).
AMER EXPRESS CO (AXP): Free Stock Analysis
GREEN DOT CP-A (GDOT): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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