Higher Payment Volumes to Drive Visa's (V) Q3 Earnings
Visa Inc. 's V fiscal third-quarter results should reflect payment transaction growth led by higher consumer spending fueled by a strong economy. Continued growth of cards and digital methods of payments should have supported the increase in payment transaction.
The Zacks Consensus Estimate for total payment transaction is 40.6 billion, up 12.5% year over year. This should be driven by payments transaction growth from Asia Pacific, Cemea, Lac, U.S.A., the Zacks Consensus Estimate for which is pegged at 6.47 billion, 3.97 billion, 3.10 billion and 17.2 billion, respectively, reflecting year-over-year increase of 22.6%, 53.8%, 3.6%, and 15.3%.
High gas prices and increased spending in retail should have buoyed Visa's total payments volume, which is expected to grow by 12.3% to $2.09 billion in the fiscal third quarter as per the Zacks Consensus Estimate.
Visa should report an increase in revenues from growth of key business drivers such as payments volume, cross border volume and process transactions. Visa revenues have grown consistently over the past several years. We strongly believe that the company should retain its revenue momentum in the to-be quarters on the back of its strong market position and attractive core business that continues to be driven by new deals, renewed agreements, accretive acquisitions, increasing spending via cards, shift to digital form of payments and expansion of service offerings.
Results should also see an upside from the Visa Europe acquisition. The deal has been accretive to the company, having contributed to its top line by bolstering payments volume, cross-border volume and processed transactions. The deal contributed to fiscal 2017 EPS by mid single digits and management expects an addition of high single digits to fiscal 2018 EPS. Part of it should be accrued in the to-be reported quarter.
The company's share buyback activity should provide an extra cushion to its bottom line. (Read more: Will Revenue Growth Aid Visa's Earnings This Season? ).
Zacks Rank Other Stocks to Consider
Visa carries a Zacks Rank #3 (Hold). Its Earnings ESP of +0.04% along with a favorable Zacks indicates chances of it beating the Zacks Consensus Estimate. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Here are some other companies from the same space that are poised for a beat based on our model.
Total System Services, Inc. TSS has an Earnings ESP of +1.81% and a Zacks Rank #3. The company is expected to report second-quarter earnings results on Jul 24.
Worldpay, Inc. WP has an Earnings ESP of +0.14% and a Zacks Rank #3. The company is expected to report second-quarter earnings results on Aug 9.
WEX Inc. WEX has an Earnings ESP of +0.28% and a Zacks Rank #2 (Buy). The company is expected to report second-quarter earnings results on Aug 2.
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