Payments technology giant, Visa, (V:NYQ), reports Q3 2017 earnings on 20th July 2017. The multinational financial services corporation is headquartered in Foster City, California and was originally founded 59 years ago in 1958. The company’s dominant business lies in electronic funds transfers across the globe – through Visa branded credit and debit cards. The company serves a huge community of users – connecting consumers, merchants, financial institutions, businesses, strategic partners and government entities through electronic payments services. Further to this Visa services provide a major operational channel for commerce internationally.
1) Share Price – Going from Strength to Strength
Over the past twelve months the Visa share price is up over 24%, on aggregate. However, in a trend that has affected US financial stocks across the board, the share price suffered significantly around November 2016, during the US election period. The stock has drifted upwards consistently since this time and is up almost 20% year to date indicating a promising trajectory for the remainder of 2017.
Source: https://markets.ft.com/
2) Earnings Expectations
Visa reported Q2 2017 earnings per share (EPS) in April of this year at 0.86USD per share – outperforming the analyst expectation level of 0.79USD by 8.8% whilst furthermore improving by an impressive 26.47% year on year for Q2 reporting figures. The company has been executing a number of strategic expansion initiatives over the past year to create additional revenue streams. Therefore, it is expected the company will deliver strong earnings for this quarter and the remainder of the fiscal year as well as through 2018.
3) Visa Checkout
Visa management have been driving several innovative digital business based initiatives to keep pace with evolving market demand – such as Visa Checkout. This is a new digital payment platform that to date has been gaining traction, growing at an impressive rate – with over 20 million enrolled accounts since launch. Visa has furthermore rolled out additional digital initiatives across the globe which have been driving growth and are gaining fast in popularity with users – examples include Visa Direct and mVisa. This expansion drive is crucial to keep ahead of fintech companies that are seeking to erode Visa market share.
4) Paypal Partnership
One of the most recent headline grabbing deals executed by Visa is a partnership with PayPal to jointly issue debit cards within Europe – announced in July 2017. This deal has been made to reduce frictions for Visa card users when they wish to use PayPal services and vice versa. It will overall add to the ease of making transactions across Europe. This partnership is a part of Visa’s wider strategy to facilitate greater ease of making digital payments.
5) Dividends – Strong Upward Trajectory
Visa reported a dividend of 0.56 USD for 2016 – delivering a 16.67% increase year on year to shareholders. Wall Street analysts are forecasting that this year’s dividend will deliver an attractive 18.57% improvement in dividends year on year – expected at 0.66 USD for 2017.
A key area to watch, that could pose a threat to Visa’s market-share, is the growth of the fintech industry. The entrenched success of Visa in its role as a payments service provider indicates the sector is a key target for disruption. The company is pursuing numerous expansion strategies to drive digital segment growth and has robust fundamentals in place. They are therefore positioned well to fend off this area of competition.
Sources:
- https://markets.ft.com/data/equities/tearsheet/summary?s=V:NYQ
- http://investor.visa.com/financial-information/quarterly-earnings/
- https://seekingalpha.com/article/4042318-visa-v-q1-2017-results-earnings-call-transcript
