Credit card processor Visa ( V ) will report its fiscal fourth-quarter results on October 25. The company will post its quarterly numbers before the market open, with the consensus calling for earnings of $0.86 per share. During the same period last year the company earned $0.78, and the stock has appreciated 34.9% on the year.
V was recently trading at $107.21, down $2.05 from its 12-month high and $32.04 above its 12-month low. Technical indicators for V are bullish and the stock is in a strong upward trend. The stock has recent support above $102.50 and has recent resistance below $109.25. Of the 27 analysts who cover the stock, 23 rate it a "strong buy", three rate it a "buy", and one rates it a "hold". V gets a score of 70 from InvestorsObserver's Stock Score Report.
Improvements in the overall economy, coupled with slowly rising interest rates have resulted in bullish sentiment on Wall Street for credit card companies. Visa stock is trading just shy of a record high, which has pushed the P/E ratio up to 40.0. The multiple is pretty much in line with Mastercard ( MA ), so investors should not worry too much about the valuation, and with Visa expected to grow earnings by 17.8% during the current year, and by 18.9% next year, there is plenty of reason to remain bullish on the stock's outlook. The company has topped estimates on the bottom line the last two quarters, while sales have been better than expected for four straight quarters. Wall Street expects another earnings beat, with a whisper number of $0.88 on the stock, which is two pennies above the consensus. V is trading at $107.21, with an average price target of $115.40.
Stock Only Trade
If you want to set up a bullish hedged trade on V, consider a January 90/95 bull-put credit spread for a 25-cent credit. That's a potential 5.3% return (21.1% annualized*) and the stock would have to fall 11.2% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider a January 120/125 bear-call credit spread for a 25-cent credit. That's a potential 5.3% return (21.1% annualized*) and the stock would have to rise 12.2% to cause a problem.
Covered Call Trade
Originally published on InvestorsObserver.com