Why Visa Earnings Continue to Impress Investors

Visa Inc. (NYSE: V) reported its fiscal fourth-quarter financial results before the markets opened on Wednesday. The company said that it had $0.90 in earnings per share (EPS) on $4.86 billion in revenue, which compared with consensus estimates from Thomson Reuters of $0.85 in EPS and revenue of $4.63 billion. The same period of last year reportedly had EPS of $0.78 and $4.26 billion in revenue.

The credit card giant reported its segment revenues as follows:

• Service revenues were $2.1 billion, an increase of 20% year over year.
• Data processing revenues rose 16% over the prior year to $2.1 billion.
• International transaction revenues grew 20% to $1.8 billion.
• Other revenues rose 3% to $226 million.

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During the quarter, payments volume grew 10% over the prior year on a constant dollar basis and excluding Europe co-badge volume from prior year’s results. Cross-border volume growth, on a constant dollar basis, was also up 10%.

Total processed transactions increased by 13% to 29.2 billion.

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In terms of the outlook for fiscal 2018, Visa expects to see annual net revenue growth of high single digits on a nominal dollar basis and client incentives as a percentage of gross revenues in the range of 21.5% to 22.5%. EPS is also expected to grow at the “high end of mid-teens” on a nominal dollar basis.

The consensus estimates call for $4.00 in EPS and $19.95 billion in revenue for the 2018 fiscal year.

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Alfred F. Kelly Jr., CEO of Visa, commented:

Visa ended our fiscal year as we began, with strong growth across payments volume, cross-border volume and processed transactions, which was bolstered by the addition of Visa Europe. We’re very pleased with our progress in Europe and will continue to make strategic investments that will further strengthen our franchise there and globally. As we look ahead to fiscal 2018, we are positioned for sustained growth and remain confident in our ability to continue delivering strong shareholder value.

Shares of Visa closed Tuesday at $108.41, with a consensus analyst price target of $117.69 and a 52-week range of $75.17 to $109.26. Following the announcement, the stock was up about 1% at $109.60 in early trading indications Wednesday.

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