Visa Down Despite Record Profits and Revenues
Payment services group Visa set its all-time record on both the bottom and top lines of its quarterly report released late July 29. For the three months from April to June, the firm generated $2.98 of EPS (earnings per share) on revenue of $10.2 billion, while the Wall Street pool of analysts suggested $2.84 per share on $9.84 billion. This is an additional increase of almost 5% and 3.6% compared to 17% and 10.5% YoY, respectively, already included in the consensus forecast. With such amazing financial results, it seems so that any other stock would be doomed to grow. Yet, that's the way it goes sometimes, when your favourite cookie crumbles despite you least expect it. Visa shares have remained in their consolidation phase since mid-June.
An initial 3% slide down in extended trading during the first minutes after earnings came out, from $351.3 to $340 per share, was then rewarded by a partial recovery to $344.5, so that losses shrank to 1.8% in the pre-market trading on July 30. The June 20 low around $335 and the April 30 low at $333.24 are still the two major pillars of technical support for Visa that are encouraging bulls, so we figure that the overly rapid previous Visa run from $299 to $375.5 this spring simply needed a breather for a while. Nominally, a good excuse for taking some extra time to catch a breath may be that Visa just kept its full-year guidance for net revenue pace unchanged in the "low-double-digits" and a diluted EPS increase in the "low-teens", which could be a simple way of conservatism, especially given the macro environment of tariff wars to potentially boost some prices and limit consumer spending.
None of this is noticeable or even close yet, however. But the earnings beat is great and already here, and cross-border payment volume even accelerated by 12% YoY or 11% YoY if excluding intra-Europe, according to Visa's Q2 report. Its card business is still expanding as well to 4.8 billion cards worldwide, a 7% higher than in the same period of 2024, while the key metric of credit cards grew 8% to 1.4 billion. More details for revenue structure show that its data processing segment led with 15% growth to $5.15 billion, followed by international transactions at 14% to $3.63 billion, while service revenue added 9% to $4.33 billion and the other and smaller revenue parts (up to $1 billion or so) even performed particularly strong with 32% growth. The company also continued its attractive capital return program to distribute as much as $6 billion to shareholders through $4.83 billion in share repurchases and $1.15 billion in dividends during the last quarter. We generally do not see any weak spots in Visa business and expect a gradual return to active purchases from current dips, especially when tariff-driven uncertainty fades further, with the first target price of $375 and the subsequent one of about $400 per share.
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