Visa(V) ZACKS·2025-01-24 16:10Core Viewpoint - Visa Inc. is expected to report its first-quarter fiscal 2025 results on January 30, 2024, with earnings projected at 9.34 billion, indicating a year-over-year growth in both metrics [1][2]. Financial Estimates - The earnings estimate for the fiscal first quarter has been revised downward by 1 cent over the past 60 days, but still indicates a 10.4% year-over-year increase. Revenue estimates suggest an 8.2% year-over-year growth [2]. - For fiscal 2025, the consensus estimate for Visa's revenues is 11.19, predicting an 11.3% increase [3]. Earnings Performance - Visa has a strong history of beating earnings estimates, having surpassed them in each of the last four quarters with an average beat of 3% [3]. - The company has an Earnings ESP of +0.09% and a Zacks Rank of 3 (Hold), indicating a likelihood of an earnings beat this quarter [4]. Growth Drivers - The growing adoption of digital payment methods is expected to positively impact Visa's fiscal first-quarter results, with a projected 5.3% increase in total Gross Dollar Volume year-over-year [5]. - Total processed transactions are estimated to grow by 9.8% year-over-year, with a model prediction of a 10% increase [6]. - Total payment volumes are expected to rise by 6.7% year-over-year, with U.S. operations projected to increase by over 5% [7]. Revenue Breakdown - Data processing revenues are estimated to grow by 9.9% year-over-year, while service revenues are expected to increase by 8% [8]. - International transaction revenues are projected to grow by over 12% year-over-year, supported by continuous growth in cross-border volumes [9]. Expense Considerations - Adjusted total operating expenses are expected to increase by more than 10% year-over-year due to higher personnel, marketing, and processing expenses [11]. - Client incentives are estimated to be around $3.9 billion for the fiscal first quarter, which may offset some positive impacts from higher volumes [11]. Stock Performance - Visa's stock has increased by 20.8% over the past year, underperforming the industry growth of 24% and lagging behind peers like Mastercard and American Express [12]. - The current valuation of Visa is 28.15X forward 12-month earnings, above its five-year median of 26.85X and the industry's average of 25.19X [15]. Strategic Positioning - Visa is leveraging the surge in e-commerce and demand for digital payment solutions to maintain growth, with a focus on payment facilitation that shields it from risks associated with lending [18]. - The company has significant growth potential in emerging markets, where many individuals remain underbanked, supported by robust operating cash flow [19]. Regulatory Environment - Visa faces challenges from regulatory pressures, ongoing lawsuits, and the Credit Card Competition Act of 2023, which could impact profit margins [20].