Global electronic payment processing giant
) is scheduled to release its second-quarter of fiscal 2014
financial results after the closing bell on Apr 24.
In the last reported first-quarter of fiscal 2014, the company
had delivered a 1.9% positive earnings surprise, while the
four-quarter trailing average beat is pegged at 4.3%. Let's see
how things are shaping up for this announcement.
Factors that Seek Attention
Visa benefits from a debt-free balance sheet, constant
synergies from diversified business strategies, technology
upgrades, effective marketing efforts, and cost-cutting
initiatives along with a healthy market recovery. Capital
deployment through strategic acquisitions and alliances and
incremental shareholder value also boost investor confidence.
However, higher expenses and an adverse impact of currency
fluctuation along with a tepid outlook for fiscal 2014 raise
caution regarding an earnings beat. Moreover, increasing
regulatory compliances and intermittent litigation charges
continue to restrict the desired upside, overall justifying our
neutral stance on the stock.
Going ahead, Visa's growth is expected to remain sluggish in
comparison to prior years. This is also reflected in its top-line
growth guidance in the low double digits, excluding a 2%
reduction due to the negative impact of foreign currency, and
bottom-line growth in mid-to-high teen range in fiscal 2014,
lower than 22% growth recorded in fiscal 2013.
Our proven model shows that Visa is unlikely to beat earnings
as it lacks the required combination of two key ingredients.
: Visa has a negative Zacks ESP. That is because Expected
Surprise Prediction or
, which represents the difference between the Most Accurate
estimate of $2.17 per share and the Zacks Consensus Estimate of
$2.19, is -0.91%.
: Visa has a Zacks Rank #3 (Hold). 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 the earnings announcement.
The combination of Visa's Zacks Rank #3 and -0.91% ESP deter
us from being confident of an earnings beat on Apr 24.
Other Stocks to Consider
Here are some companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this coming quarter:
Endurance Specialty Holdings Ltd.
), earnings ESP of +9.91% and a Zacks Rank #1 (Strong Buy).
), earnings ESP of +1.82% and a Zacks Rank #1.
CBOE Holdings Inc.
), earnings ESP of +3.70% and a Zacks Rank #3 (Hold).
CBOE HOLDINGS (CBOE): Free Stock Analysis
ENDURANCE SPLTY (ENH): Free Stock Analysis
LAZARD LTD (LAZ): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
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