Visa Inc. 's ( V ) fiscal second-quarter
(ended Mar 31, 2013) operating earnings of $1.92 per Class A common
share were modestly ahead of the Zacks Consensus Estimate of $1.81.
Additionally, the result substantially exceeded the prior-year
quarter earnings of $1.60 per share.
Net income increased 17.2% to $1.27 billion from $1.08 billion
in the year-ago quarter. Including a deferred tax adjustment,
reported net income in the year-ago quarter stood at $1.29 billion
or $1.91 per share.
Alongside, total operating revenues for the reported quarter
were $2.96 billion, up 14.7% year over year and outpaced the Zacks
Consensus Estimate of $2.85 billion. Growth was driven by strong
performance across most segments.
Service revenues increased 10.3% year
over year to $1.37 billion and are recognized based on payments
volume in the prior quarter. All other revenue categories are
recognized based on the current quarter activity. Data
processing revenues spiked 24.7% over the prior-year
period to $1.15 billion.
transaction revenues, which are driven by
cross-border payments volume, climbed 13.4% over the prior-year
quarter to $831 million. Other revenues,
earned through Visa Europe's licensing fee, were $175 million,
slipping from $179 million in the year-ago quarter.
Client incentives , which are a
contra-revenue item, came in at $567 million, and accounted for 16%
of gross revenue.
On a constant dollar basis, payment volume increased 9% year
over year to $1.0 trillion. Total processed transactions carrying
the VisaNet brand increased 6% year over year to 13.9 billion.
Cross border volume, on a constant dollar basis, grew 10% over the
However, total operating expenses jumped 13% year over year to
$1.1 billion. Subsequently, Visa's operating income grew 15.8% to
$1.86 billion versus $1.61 billion in the year-ago period.
As of Mar 31, 2012, cash and cash equivalents and
available-for-sale investment securities amounted to $4.4 billion,
down from $5.4 billion as of Sep 30, 2012. Nevertheless, long-term
debt remained nil.
Total shareholder equity was recorded at $26.9 billion, down
from $27.63 billion as of Sep 30, 2012. Further, Visa's operating
cash outflow stood at $1.18 billion at the end of Mar 2013 against
operating cash inflow of $2.34 billion recorded at the end of Mar
During the reported quarter, Visa repurchased about 12.0 million
class A common shares for a total cost of $1.8 billion.
In Feb 2013, the board sanctioned a new share repurchase program
worth $1.75 billion, which is set to expire by Jan 2014. Currently,
the company has $1.0 billion available for repurchases.
Visa revised the financial outlook for fiscal 2013, anticipating
the annual operating earnings per share to grow about 20% from the
prior estimate of high-teens range. Annual net revenue growth is
expected in the low double-digits range. The company estimated
annual operating margin of about 60% and capital expenditure within
Further, Visa expects client incentives within the range of
16-17% of gross revenue and marketing expenses to be less than $1.0
billion. Meanwhile, tax rate is expected within 30-32%. Visa
continues to project annual free cash flow of about $6 billion.
This includes tax benefits to be realized during fiscal 2013
related to non-recurring litigation escrow payments of
approximately $4.4 billion that was made during the fiscal first
On Apr 24, 2013, the board of Visa declared a quarterly dividend
of 33 cents per share of class A common stock, which will be paid
on Jun 4, 2013, to the company's common shareholders of record as
on May 17, 2013.
On Mar 5, 2013, Visa paid a quarterly dividend of 33 cents per
share to the company's common shareholders of record as on Feb 15,
2013. In Oct 2012, Visa declared a 50% hike in its quarterly
dividend to 33 cents per share from the prior 22 cents.
Concurrently, arch rival MasterCard Inc. ( MA ) reported
first-quarter 2013 operating earnings per share of $6.23, which
comfortably surpassed the Zacks Consensus Estimate of $6.19 and the
year-ago quarter's earnings of $5.36 as well. Improved top line and
modest growth in operating expenses supported the growth in
margins, bottom line and cash flow.
Both Visa and MasterCard carry a Zacks Rank #3 (Hold). Other
strong performers in the financial sector include Employers
Holdings Inc. ( EIG ) and
Stancorp Financial Group Inc. ( SFG ), both of which
carry a Zacks Rank #1 (Strong Buy).EMPLOYERS HLDGS (EIG): Free Stock Analysis
ReportMASTERCARD INC (MA): Free Stock Analysis ReportSTANCORP FNL CP (SFG): Free Stock Analysis
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