Visa shares rise on strong earnings that beat expectations
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Visa shares rise on strong earnings that beat expectations

Payment processing giant Visa reported fourth quarter earnings for 2018 on Wednesday, demonstrating a robust business that is outperforming analysts’ expectations. Visa didn’t just beat on the bottom line: it’s processing more transactions, and pushing into new areas. In other words, its underlying business is driving strong financials (although they also got a helping hand from the Republican tax cut). Add some positive guidance to the mix, and it’s easy to see why Visa traded up by 2% on the day.

So far this year, Visa’s share price has appreciated by 18%

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Source: Yahoo Finance

Visa said that profits rose by an impressive 33%, pushed upwards by the combination of better fundamentals and a lower tax rate. The company processed $2.086 trillion on its payment network in the last quarter of 2018, an 11% rise from the fourth quarter of the previous year. That positive metric drove strong financials across the board: earnings per share came in at $1.23 (in the fourth quarter of 2017, it was 90 cents), beating analysts’ expectations of $1.20 per share. Revenues met expectations, coming in at $5.43 billion (in the comparable period last year, they stood at $4.86 billion).

On the company’s earning call, CEO Alfred F. Kelly Jr. was eager to point to the company’s successes in 2018 – but resolute that focus now lay on 2019. He said:

“Fiscal 2018 was a great year where we delivered strong business driver and financial performance, while also advancing key initiatives that will drive future growth, such as Visa Direct B2B, contactless and digital solutions. We also successfully concluded the major aspects of the Visa Europe integration with the completion of the platform migration and the shift to commercial client contracts. However, fiscal 2018 is behind us now and we are totally focused on 2019.”

He also added that the company expects “net revenue growth of low double digits” next year.

Disclosure
Dominion holds Visa in its Global Trends Ecommerce Fund.


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