Visa Earnings Preview: U.S. Trends In Focus

October 27th, 2014 by Trefis Team
+11.04%
Upside
271
Market
301
Trefis
V: Visa logo
V
Visa

Visa (NYSE:V) is scheduled to report earnings for the fourth fiscal quarter on Wednesday, October 29. [1] In the previous quarter, the company reported an 11% year-over-year increase in net income, while an increase in global payment volume propelled revenues by 5% year-over-year on a nominal basis. ((SEC 8K Filing))

We expect an improving economic environment in the U.S. and slightly better consumer spending sentiment to result in moderate growth for Visa in the quarter. We have a price estimate of $217 for the company’s stock, about in line with the current market price.

See Our Full Analysis for : Visa|MasterCard|American Express

Relevant Articles
  1. Visa Stock Gained 30% In The Last Twelve Months, What To Expect Now?
  2. What To Expect From Visa Stock ?
  3. Is Visa Stock Undervalued?
  4. Visa Stock To Beat The Consensus In Q2
  5. Visa Stock To Top Consensus In Q1?
  6. Is Visa Stock Fairly Priced At The Current Levels?

Trends In The U.S.

Payment volume increased 11% year-over-year to about $1.2 trillion in the previous quarter, while total processed transactions for the quarter grew by 11% year-over-year to 16.7 billion.

The U.S. market accounts for over half of Visa’s payment volumes, and is therefore a major driver of the company’s growth. [2] Over the past few months, the U.S. economy has seen improvement, with GDP expanding by about 4% in the second quarter, the unemployment rate recently dropping below 6% for the first time since the downturn, and personal consumption expenditures (PCE) increasing by about 0.1% and 0.5% during the months of July and August, respectively. ((National Income and Product Accounts, Bureau of Economic Analysis)) Compared to the second quarter data, the recent growth has been on the slower side, indicating a positive – but not overly enthusiastic – consumer spending environment.

According to the University of Michigan and Thomson Reuters surveys of consumers, consumer confidence in the U.S. has risen to a new high driven by healthier prospects of the U.S. economy. [3] Given the abovementioned economic indicators, we expect healthy growth in the U.S.

International Growth Prospects

Outside of the U.S., Asia Pacific is an important market for the company. It accounts for nearly 60% of Visa’s international payments volume. In the last quarter, payments volume increased 11% year-over-year on a nominal basis. [2] We expect solid growth again this time around.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research

Notes:
  1. Q4 2014 Visa Inc Earnings Conference Call, Visa Investor Relations [↩]
  2. SEC 10-Q Filing [↩] [↩]
  3. Surveys of Consumers, University of Michigan – Thomson Reuters [↩]