Banking, finance, and taxes

Earnings Beat Not Enough To Boost Visa Stock 

Paul Ausick

Published: April 30, 2020 4:37 pm

Visa Inc. (NYSE: V) reported fiscal second-quarter 2020 results after markets closed Thursday. The credit card issuer posted quarterly adjusted diluted earnings per share (EPS) of $1.39 and revenues of $5.9 billion. In the second quarter of 2019, Visa reported an adjusted EPS of $1.28 on revenues of  $5.5 billion. Consensus estimates called for EPS of $1.35 and $5.75 billion in revenue.

In January, Visa announced that it will pay $5.3 billion to acquire fintech company Plaid, a provider of a platform that links consumers to banks. The acquisition is expected to be completed by the end of this year.

Visa offered a total of $4 billion in fixed-rate senior notes on March 31 with maturities ranging between 7 and 20 years and interest rates of 1.9% to 2.7%. The company said it will use the funds for general corporate purposes.

Operating expenses of $1.93 billion increased by 4% compared with the first quarter of last year.

Payment volume rose 5% year over year in the quarter and processed transactions totaled 34.9 billion, an increase of 7%.

CEO Alfred F. Kelly, Jr. said:

Although the road ahead will likely be challenging for a number of quarters, our business model is resilient and our strategy to enable the movement of money globally is more relevant than ever.

Visa did not provide guidance for the full fiscal year, citing uncertainty created by the COVID-19 pandemic.

Analysts are looking for third fiscal quarter 2020 revenues of $5.13 billion and adjusted EPS of $1.16. For the 2020 fiscal year, the consensus estimates call for revenues of $22.36 billion and adjusted EPS of $5.26.

Visa beat the consensus estimates and the company paid $3.2 billion in cash to repurchase stock during the quarter and will pay its $0.30 per share dividend on June 2 to shareholders of record as of May 14.

(barely) and chipped a percentage point off its prior EPS growth estimate. Investors clearly expected more. The dividend yield on the stock 0.66%.

Visa’s stock traded down about 0.7% in Thursday’s after-hours session at $177.50 after closing at $178.98. The stock’s 52-week range is $133.93 to $214.17 and the 12-month consensus price target was $195.84 before the report.