Visa Stock To Beat The Consensus In Q2
Visa (NYSE: V) is scheduled to report its fiscal Q2 2023 results on Tuesday, April 25, 2023 (after market close). We expect Visa to top the consensus estimates of earnings and revenues. The company posted better-than-expected results in the last quarter, with net revenues (total revenues minus client incentives) increasing 12% y-o-y to $7.9 billion. It was driven by a 22% rise in the cross-border volume, a 5% growth in the payments volume, and a 10% increase in the number of processed transactions. We expect the same trend to drive the second quarter results (FY Oct-Sept).
Our forecast indicates that Visa’s valuation is $260 per share, which is 11% above the current market price of $234. Our interactive dashboard analysis on Visa’s Earnings Preview has more details.
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(1) Revenues expected to edge past the consensus estimates
Visa’s revenues (net revenues) increased 22% y-o-y to $29.3 billion in FY2022 and 12% y-o-y to $7.9 billion in Q1 2023.
- The Data processing revenues grew 6% y-o-y in Q1 driven by a 10% rise in the number of processed transactions. We expect the Q2 results to follow the same trend.
- The Services revenue increased 10% y-o-y due to a 5% improvement in the nominal payments volume. We expect the same trend to continue in the second-quarter results.
- The International transactions revenues rose by 29% y-o-y because of a 22% jump in cross-border volumes. We expect the Q2 results to be on similar lines.
- Overall, we forecast Visa’s net revenues to remain around $32.3 billion in FY2023.
Trefis estimates Visa’s fiscal Q2 2023 revenues to be around $7.91 billion, just above the $7.79 billion consensus estimate.
2) EPS likely to beat the consensus estimates
Visa Q2 2023 adjusted earnings per share (EPS) is expected to be $2.01 per Trefis analysis, 2% above the consensus estimate of $1.98. The net income increased 21% y-o-y in FY 2022 driven by higher revenues. Further, the figure improved by 6% y-o-y in the first quarter. It was due to positive growth in the top line, partially offset by a 25% rise in operating expenses. We expect the same trend to continue in Q2. Overall, Visa is likely to report a net income of $17.65 billion and an annual GAAP EPS of $8.42 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 $8.42 and a P/E multiple of just above 30x in fiscal 2023. This translates into a price of $260, 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 | Apr 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| V Return | 4% | 13% | 200% |
| S&P 500 Return | 1% | 8% | 85% |
| Trefis Multi-Strategy Portfolio | 2% | 10% | 246% |
[1] Month-to-date and year-to-date as of 4/24/2023
[2] Cumulative total returns since the end of 2016
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