Electronic payments processor Visa Inc. (V - Free Visa Stock Report) finished the first half of fiscal 2018 on a strong note. (Year ends on September 30th.) During the March quarter, the Dow-30 member logged revenues and share earnings of $5.073 billion and $1.11, respectively. The former marked an advance of 13% from the year-earlier period, while the latter was an improvement of 29%. (Our respective top- and bottom-line targets for the fiscal second quarter were $5.068 billion and $1.02 per share.) Visa shares edged higher in pre-market trading on the heels of the earnings release, establishing a new record for the stock.
Transaction activity was solid during the latest three-month period, both at home and abroad. Specifically, total dollar volumes in Europe, Latin America, Asia/Pacific, and the segment comprised of Central Europe, the Middle East, and Africa increased 7.6%, 8.2%, 7.0%, and 6.5%, respectively, versus the same span in 2017. At the same time, results in North America were not too shabby, with total dollar volumes expanding 9.3% and 9.5%, respectively, in the United States and Canada. Visa's international operations accounted for 61% of the total in the March term, compared with 60% in the prior-year quarter. (All figures are presented on a constant-dollar basis.)
In light of the company's solid second-quarter performance, we've added $0.20 to our fiscal 2018 share-net call, to $4.40, which would be an advance of 25%-27% from last year. (Our current-year revenue estimate stands at $20.2 billion, representing an increase of 9%-11% from 2017.) Looking ahead to fiscal 2019, we're introducing top- and bottom-line forecasts of $22.4 billion and $5.20 per share, respectively, marking growth of 10%-12% and 17%-19% from our 2018 projections.
There's a lot to like here from an investment perspective. Visa remains the worldwide leader in the electronic payments sector, registering more transactions than its three closest competitors (American Express, MasterCard, and Discover Financial Services) combined. Meanwhile, management continues to return capital to stockholders; concurrent with the March-period earnings release, the board raised the quarterly dividend 8%, to $0.21 per share; and Visa repurchased 16.9 million shares of class A common stock in the latest interim, for an aggregate $2.0 billion. Moreover, the equity carries our Highest (1) rank for Safety, and the company garners a stellar mark for Financial Strength (A++). In sum, Visa would make a fine addition to most portfolios.
About The Company:Visa Inc. is the world’s largest retail electronic payments network providing processing services and payment product platforms. This includes credit, debit, prepaid, and commercial payments, which are offered under the Visa, Visa Electron, Interlink, and PLUS brands. Visa/PLUS is one of the largest global ATM networks, offering cash access in local currency in more than 200 countries. Visa’s global network, VisaNet, delivers value-added processing, including fraud and risk management.
— Sharif Abdou
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
