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Visa earnings preview: One digital battle after another

Al Kelly chairman and chief executive of Visa

Visa will post earnings on Tuesday and both analysts and investors will want to see whether the payments giant took advantage of the spike in online shopping during pandemic lockdowns.

Revenues for its third quarter are expected to slide to $4.81bn, which is 17.7% less than the $5.84bn the company brought in the year before, as a result of lower transaction volume due to store closures and limited foot traffic during the worst days of the pandemic in the developed world.

However, revenues could end up surprising investors on the upside, as the company, led by chairman and chief executive Al Kelly (pictured), may have managed to take advantage of higher digital payments volume as a result of increased online shopping activity while people stayed at home.

Earnings per share are forecasted to land at $1.02 for the quarter, down 25.6% from the previous year, and 26% lower than the $1.38 per share the company reported by the end of the three-month preceding this report.

Visa (V) shares have managed to rebound from their March lows of $135.5 per share and they are now trading 46% higher at $197.4 as investors have recouped their confidence on the payments processor in hopes of a swift global economic recovery.

visa ytd performance

Visa’s strong balance sheet and its consistent earnings growth over the past five years for some analysts make it an interesting candidate for a buy-and-hold strategy, especially when considering that the stock is trading 7.3% lower than its 2020 all-time high of $213 per share.

If the Foster City-based financial company manages to surprise investors with stronger than expected revenues or earnings the stock could shot up back to those high levels, as its fundamentals make it a relatively fairly-valued candidate in a market where expensive valuations seem to be the norm.

Visa, along with its closest contenders Mastercard and American Express, are in a race to compete in the digital payments as e-commerce businesses, such as PayPal or Worldplay-owner Fidelity National Information Services, seize market share.

In May, Visa appointed Chris Newkirk as its chief strategy officer, to oversee its digital transformation.

Visa boss Kelly said: “I look forward to welcoming Chris into our Visa family. He will bring some incredible experience and new insights as we continue to deliver on Visa’s strategy, build stronger client relationships and grow our business”.

Visa earnings conference call is scheduled to take place on Tuesday 28 July at 2:00 PM PT.

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.