Visa (Shutterstock photo)
Credit card issuer Visa (V) will report second quarter fiscal 2017 earnings results after the closing bell Thursday. Like its corporate slogan, “It’s everywhere you want to be,” Visa stock -- up 15% year to date -- has been under heavy accumulation for most of the year. The shares are second only to Apple (AAPL) among the Dow's best-performing stocks.
As with Apple, Visa continues to ride high after crushing its first quarter results back in February. And with solid results just released from rival American Express Company (AXP), which cited higher income from interest and fees, Visa now needs to account for the market's unwavering confidence.
For the quarter that ended March, the San Francisco-based company is expected to report 79 cents in earnings per share on revenue of $4.31 billion, according to Thomson Reuters. This compares to the year-ago quarter when the payments technology company earned 68 cents per share on revenue of $3.63 billion. For the full year, ending in December, earnings are projected to rise 17% year over year, while revenue of $17.78 billion would rise 18%.
Wall Street remains optimistic about the company's growth drivers. Visa in February crushed analysts' first quarter earnings estimates, thanks to a 47% surge in payment volumes. First quarter revenue surged 25% year over year to $4.46 billion, easily topping Street forecast by $170 million. Revenue was driven by an almost 40% year-over-year jump in processed transaction, reaching $1.8 trillion in payments on its network.
The company, which in January finalized its acquisition of Visa Europe, continues to find innovative ways to get shoppers to use their debit and credit cards more. And thanks to Visa Europe, the combined company's worldwide financial network of more than 17,000 institutional clients and partners is now more ubiquitous, lending credence to its corporate slogan.
To be sure, on Thursday currency headwinds, which devalues its sales in overseas markets, could creep in. This is something analysts will watch closely. Likewise, any details Visa provides with respect to guidance and how its new partnership with Costco (COST) can drive revenue higher will be closely scrutinized.
But overall, on the back of rising interest rates, combined with diligent costs cuts and incremental revenue from Visa Europe, Visa -- despite some near-term risks -- has tons of catalysts investors should be excited about. To the extent it can answer the call Thursday, the shares, which have a consensus Buy rating, should reach their analysts price target of $98, suggesting 12% returns.