Visa Trips on Earnings Despite Overcoming Currency Headwinds

The strengthening of the U.S. dollar impacted net operating revenues by approximately 2.5 percentage points of negative growth during the quarter. Anytime you see a 2.5% hit from currencies, generally speaking, it’s not a good thing. However, considering other companies have been at the mercy of these currency headwinds, 2.5% doesn’t seem so bad.

The company reaffirmed its guidance for the 2015 fiscal year. Visa expects annual net revenue growth in the low double digits, on a constant dollar basis, and EPS growth in the low-end of the mid-teens range. There are consensus estimates of $2.59 in EPS and $13.82 billion in revenue.

During the three months ended in March, Visa repurchased 16.2 million shares of class A common stock, at an average price of $64.84 per share, using $1.1 billion of cash on hand.

Last week, the board of directors declared a quarterly cash dividend of $0.12 per share of class A common stock, yielding an annualized dividend of $0.48.

Charlie Scharf, CEO of Visa, commented on the fiscal second quarter earnings:

Visa reported another solid quarter of financial results against the continued backdrop of a tepid global economy. While the negative impacts from the strengthening of the U.S. dollar and lower gasoline prices continued to exert pressure on revenue growth, our results and volume trends have remained strong. It continues to be a very exciting time in payments and at Visa. There are trillions of dollars of cash to disintermediate and our work in digital payments will allow us to capture more than we could have contemplated a few years ago. We are very pleased to have been selected by Costco as the credit card network for its U.S. warehouse clubs and gasoline locations commencing next year and to bring this unique and very strategic opportunity to our issuers and their cardholders.

The company had $2.04 billion in cash and cash equivalents at the end of the quarter, compared to $1.97 billion in the same quarter last year.

Visa shares closed Thursday down 1.9% at $66.05. In after-hours trading, shares were initially down 1.6% at $65.00. Year to date, Visa shares have only rallied about 3% so far with a market cap of about $162 billion. The stock has a consensus analyst price target of $73.19 and a 52-week trading range of $48.80 to $69.98.

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