How Will Visa Stock React To Its Upcoming Earnings?

Visa (NYSE:V) is set to report its Q3 FY’25 earnings on July 29 (Sept. fiscal year). Revenues are projected to grow by about 10% year-over-year to $9.82 billion, per consensus estimates, while adjusted earnings are expected to come in at about $2.83 per share, about 17% higher than last year. Growth is likely to be driven by rising payment volumes as well as higher cross-border volumes, which are typically more lucrative. The company’s value added services business should also fare well.  VAS includes non-transactional services such as fraud protection, risk and security offerings, advisory solutions, and merchant services which typically come with higher margins. That said, investors will focus more on Visa’s outlook. The global economy could face multiple headwinds in the near term following tariffs imposed by President Donald Trump on major trading partners. This could have a significant impact on Visa, given that its business is largely tied to consumer spending and international travel volumes. Also see, Will The Rally In XRP Price Continue?

The company has $680 billion in current market capitalization. Revenue over the last twelve months was $38 billion, and it was operationally profitable, with $25 billion in operating profits and net income of $20 billion. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Visa’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 20 earnings data points recorded over the last five years, with 11 positive and 9 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 55% of the time.
• However, this percentage decreases to 50% if we consider data for the last 3 years instead of 5.
• Median of the 11 positive returns = 2.2%, and median of the 9 negative returns = -1.6%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like Visa, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception

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