Earnings Preview: Payments volume might power Visa’s growth in Q4

Visa Inc. (V) is scheduled to report earnings results for the fourth quarter of 2018 on Wednesday, October 24 after market close. Analysts expect the company to deliver revenues of $5.42 billion, reflecting a year-over-year increase of 11.6%. Earnings are expected to increase 33% to $1.20 per share.

Visa has consistently topped market expectations over the past four quarters and is on track to continue this trend in the fourth quarter as well. The main driver of the fourth quarter results is expected to be revenue growth. Growth in key business metrics such as payments and cross-border volumes as well as processed transactions will benefit revenues.

Higher economic growth, increased consumer spending and growth in digital payments in several countries are likely to drive increases in payments volume and processed transactions. The demonetization effort in India, which led to an increased shift towards digital transactions in the country, is one example of a growth driver for companies like Visa.

Visa is likely to see an increase in expenses in the fourth quarter due to its continued investments in its products, solutions and technology.

In the third quarter, Visa reported a 39% increase in EPS to $1.20 along with a 15% growth in revenues to $5.2 billion. The company also recorded revenue increases across all its segments along with growth in payments transactions, processed transactions and cross-border volume. For the full year of 2018, Visa has guided for net revenues to grow in the low double-digits.

Visa shares surpass 52-week high on strong Q3 results

Last week, Visa’s rival American Express (AXP) reported third quarter results, which topped market estimates. Another competitor Mastercard (MA) is set to report its third quarter results on Tuesday, October 30.

Visa’s shares have climbed 22% thus far this year but looking at the past one month, the stock has dropped 7%. If the company meets expectations, the stock is likely to see a lift.

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