Seeking Alpha

Visa slips despite beating headline estimates

  • FQ3 net income of $1.4B up 11% Y/Y, with EPS of $2.17 up 15%; net operating revenue of $3.2B up 7% on constant dollar basis.
  • Payments volume growth in FQ3 of $1.2T up 11% on a constant dollar basis (was up 12% in FQ2).
  • Cross-border volume growth up 7%.
  • Total processed transactions of 16.7B, up 11%.
  • Total operating expenses of $1.1B off 3%.
  • 5.6M shares repurchased during Q at average price of $207.13 each using $1.2B of cash on hand. An additional $1.9B of funds remains available for additional purchases.
  • Full-year outlook is affirmed: Revenue growth of 9-10% with an expectation of 200 basis points of negative foreign currency impact; EPS growth of 17.5-18.5%.
  • Conference call at 5 ET
  • Previously: Visa beats by $0.08, beats on revenue
  • V -2.6% AH
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Comments (22)
  • TimmiesRegular
    , contributor
    Comments (1176) | Send Message
     
    You can bet V will be buying their own shares tomorrow at 3% off. They haven't spent 1/2 of their allowed amount yet.
    24 Jul, 04:41 PM Reply Like
  • Hope128
    , contributor
    Comments (128) | Send Message
     
    Personally I wish V can drop under $215 tomorrow so my $215 short puts get assigned, I have been pondering last few days to buy it back after my shares got called away at $220 last Friday. However I still feel bad for $V that it goes down so much on a great quarter while other bubble stocks keep going up.
    24 Jul, 04:58 PM Reply Like
  • tomlos
    , contributor
    Comments (1147) | Send Message
     
    It's amazing... great results, buying back stock with profit, and yet there is a negative AH response.. just nuts.
    24 Jul, 05:02 PM Reply Like
  • chopchop0
    , contributor
    Comments (3547) | Send Message
     
    yup. ignore the noise and buy the big dips. I really hope management opens the buyback spigot if we see <$200 again.
    24 Jul, 09:57 PM Reply Like
  • BBBerry
    , contributor
    Comments (25) | Send Message
     
    It's due to low international use. Thanks Russia .
    24 Jul, 05:07 PM Reply Like
  • stoj
    , contributor
    Comments (435) | Send Message
     
    Russia has never been important or significant part of revenue, for V
    24 Jul, 05:49 PM Reply Like
  • alexmerax
    , contributor
    Comments (2) | Send Message
     
    And why is it down now?
    24 Jul, 06:13 PM Reply Like
  • simgold11
    , contributor
    Comments (8) | Send Message
     
    Biotechs Celgene & Alexion, both of which I own in addition to Visa, also beat estimates, but have tanked. I believe it has to do with the infamous analyst "whisper" estimates.
    24 Jul, 07:29 PM Reply Like
  • DrewMcVay
    , contributor
    Comments (139) | Send Message
     
    Russia is priced in under the growth spectrum of the company, which ... they guided down. Not good.

     

    Everything else is good though, 17.5-18.5% EPS growth is their target? That's awesome...

     

    I understand Visa is at a high multiple, but I do think that long term it is a win. Short term, I don't see any compelling reasons to buy it other than the fact it is going to be worth more in the long run, which I can mention a large number of securities that fit into that category.
    24 Jul, 07:31 PM Reply Like
  • DrewMcVay
    , contributor
    Comments (139) | Send Message
     
    Visa guided down forward growth, and I had some skepticism about that growth rate anyway. That is why the stock was hit, despite providing positive news literally everywhere else.

     

    This is a long term winner no question about that, but short term the expectations are too high that's been known for a while....

     

    Disclosure: I'm long V
    24 Jul, 08:40 PM Reply Like
  • Snoopy1
    , contributor
    Comments (1115) | Send Message
     
    What did they guide growth down from?
    24 Jul, 09:05 PM Reply Like
  • DrewMcVay
    , contributor
    Comments (139) | Send Message
     
    they said growth would be 9-10% instead of 10-11%
    25 Jul, 04:41 PM Reply Like
  • Snoopy1
    , contributor
    Comments (1115) | Send Message
     
    Thanks. It seems most of it was F/X and weakness in emerging markets so not a fundamental slowing of the business. While the 3.5% stock drop seems a tad excessive, valuation was a little high so today corrected for some of this.

     

    At $215, the current 21x forward P/E seems reasonable (but not cheap) given it's moat and 5 year growth projections. $225 at year end seems likely.
    25 Jul, 04:51 PM Reply Like
  • captainwho2
    , contributor
    Comments (9) | Send Message
     
    I didn't appreciate seeking alpha's choice of wording, as in "affirmed". That implies that they were reiterating previous guidance when in fact they lowered revenue guidance by 1 percentage point. Even still, +9% to +10% Rev growth vs +8.3% analyst's consensus is not exactly a disaster, especially since they are probably sandbagging a bit.
    24 Jul, 09:13 PM Reply Like
  • Looke
    , contributor
    Comment (1) | Send Message
     
    froward guidance for 2014 is lower by mgt
    24 Jul, 09:14 PM Reply Like
  • User 7530821
    , contributor
    Comments (203) | Send Message
     
    Investors must be selling V because they may view it as dead money for a while much like we saw from April 2010 to mid 2011. I did not read the 2Q Earnings transcript, but Jim Cramer said this morning that V's CEO, Charlie Scharf, indicated during the call that there are no signs yet of acceleration either domestically or internationally. The tone of the call left him feeling less than certain. I hate to say it, but I would not be surprised to see V pullback to the 205 area. 2014 may prove to be a throw away year with respect to stock appreciation, but I will take anyday a company that conistantly grows EPS in the high teens. I will continue to accumulate V when it settles down between (~205 and ~210). As the Oracle of Omaha said, "Buy when there is blood in the water".
    
    Jose
    25 Jul, 11:46 AM Reply Like
  • Hope128
    , contributor
    Comments (128) | Send Message
     
    Nicely said. Money are going to $BIDU, $FB last few days since people are chasing fast money. I also expect $V sideways between $200 to $230 for a while, given no market crash. I will also accumulate at low 200 & trade options around it to continue to lower my cost basis.
    25 Jul, 12:14 PM Reply Like
  • User 7530821
    , contributor
    Comments (203) | Send Message
     
    Thanks Hope. I like your strategy. I was actually thinking of adding to V ~210-205 and selling Jan 2015 puts. You can collect ~5-9 bucks depending on the strike price. Have you looked at it? BTW, I also own FB. Bought it as a swing trade at 64.96 and am pleased with the trade to date.
    Jose
    26 Jul, 02:17 PM Reply Like
  • Hope128
    , contributor
    Comments (128) | Send Message
     
    $V is that perfect stock for me to own with its great fundamental, i sleep well with it in my portfolio. Even it is just moving sideways this year, but narrow trading range gives me advantage for trading options. I entered at $215, but I have collected decent option premium to reduce my cost basis under $190. I sold this week $207.5 puts for 88c & $215 covered calls for $1.57, it gives me $2.45 if $V closes within this range this Friday. I don't expect a big move up soon, maybe it can go over $215 but not so far away. In case my shares get called away, I will double my short puts until I get it back for cheap. If you can collect a couple of bucks each week, that is around 1% yield, it adds up quickly.
    29 Jul, 01:54 PM Reply Like
  • User 7530821
    , contributor
    Comments (203) | Send Message
     
    $215 looks a bit tight, but otherwise there is nothing wrong with collecting small, but steady premiums with very controlled risk. I am still procrastinating whether to sell the Jan 17 2015 $195 puts. I would collect a premium of $2.92 and break even on the trade upon a 12.6% correction from current market price (~$214). V's maximum drawdown the last three years has been 15.3% making it almost a 'no brainer'. Selling Jan calls as currently priced are not such a good deal IMO. Thanks for sharing your approach. Good luck to you.
    Jose
    30 Jul, 12:55 PM Reply Like
  • Hope128
    , contributor
    Comments (128) | Send Message
     
    Jose, Jan 2015 puts do look like a no brainier to me, but I prefer to hold stocks & sell calls on strength & sell puts on weakness & collect dividend as well. Even I only collect $1/week, that adds up to $52/year, over 20% yield. I entered $V end of March,already collected $30 in 4 months, so in this speed,hopefully I can earn another $40 by end of the year, at the same time, wish the stock itself also appreciates by then.
    4 Aug, 04:45 PM Reply Like
  • User 7530821
    , contributor
    Comments (203) | Send Message
     
    Sounds good Hope. Congrats on last week's trade.
    5 Aug, 01:59 PM Reply Like
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