Visa Stock To Top Consensus In Q1?
Visa (NYSE: V) is scheduled to report its fiscal Q1 2023 results on Thursday, January 26, 2023. We expect Visa to beat the consensus estimates of earnings and revenues. The company outpaced the consensus estimates in the last quarter, with net revenues (total revenues minus client incentives) increasing 19% y-o-y to $7.8 billion. It was driven by a 49% jump in the cross-border volume (excluding intra-Europe), a 10% growth in the payments volume, and a 12% increase in the number of processed transactions. We expect the same momentum to continue in the first quarter (FY Oct-Sept).
Our forecast indicates that Visa’s valuation is $250 per share, which is 11% above the current market price of $224. Our interactive dashboard analysis on Visa’s Earnings Preview has more details.
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(1) Revenues likely to marginally beat the consensus estimates
Visa’s revenues (net revenues) increased 22% y-o-y to $29.3 billion in FY2022.
- The Data processing revenues grew 13% y-o-y in FY2022, driven by a 17% increase in the number of processed transactions. We expect the Q1 results to follow the same trend.
- The Services revenue increased 16% over the same period, because of a 15% rise in the nominal payments volume. We expect the first-quarter results to be on similar lines.
- The International transactions revenues improved by 50% y-o-y because of a 40% jump in cross-border volumes. We expect the same trend to continue in Q1.
- Overall, we forecast Visa’s net revenues to remain around $31.9 billion in FY2023.
Trefis estimates Visa’s fiscal Q1 2023 revenues to be around $7.83 billion, just above the $7.70 billion consensus estimate.
2) EPS is likely to beat the consensus estimates
Visa Q1 2023 adjusted earnings per share (EPS) is expected to be $2.04 per Trefis analysis, 1% above the consensus estimate of $2.01. The net income increased 21% y-o-y to $14.96 billion in FY 2022, thanks to the revenue growth. However, it was somewhat offset by higher expenses as a % of revenues. We expect the same trend to continue in the first quarter. Overall, Visa is likely to report a net income of $17.35 billion and an annual GAAP EPS of $8.28 in FY 2023.
(3) Stock price estimate is 11% above the current market price
We arrive at Visa’s valuation, using an EPS estimate of around $8.28 and a P/E multiple of just above 30x in fiscal 2023. This translates into a price of $250, which is 11% above the current market price.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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| Returns | Jan 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| V Return | 8% | 8% | 187% |
| S&P 500 Return | 5% | 5% | 80% |
| Trefis Multi-Strategy Portfolio | 10% | 10% | 245% |
[1] Month-to-date and year-to-date as of 1/24/2023
[2] Cumulative total returns since the end of 2016
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