Visa (NYSE: V) is set to announce its fiscal Q2 2024 results on April 25, 2024. Expectations are high for the company to surpass consensus estimates for both earnings and revenues after a strong performance in the last quarter. In Q1, net revenues increased by 9% year-over-year to $8.6 billion, with growth seen in key metrics such as payments volume, cross-border volume, and number of processed transactions. This positive trend is expected to continue in the second quarter, driving the company’s results for the fiscal year of October 2023 to September 2024.
Despite some fluctuations, Visa’s stock has shown a 25% increase from early 2021 to the present, outperforming the S&P 500 over this period. However, the stock has had some ups and downs, underperforming the S&P in 2021 but making strong gains in 2023. The challenge of consistently beating the market has been evident for many individual stocks in recent years, including other heavyweights in the Financials sector and megacap stars like Google, Tesla, and Microsoft. In contrast, the Trefis High Quality Portfolio has consistently outperformed the S&P 500 each year over the same period, suggesting that investing in a diversified collection of stocks may provide better returns with less risk.
Trefis forecasts Visa’s valuation to be $301 per share, which is 12% above its current market price of $270. The company’s revenues are expected to slightly exceed consensus estimates, with net revenues growing by 11% year-over-year in FY2023 and 9% in Q1 2024. Data processing revenues and services revenues have shown strong growth, and international transactions revenues are also expected to continue their upward trajectory. Overall, Visa’s net revenues for FY2024 are forecasted to be around $35.97 billion.
In terms of earnings per share (EPS), Visa is likely to beat consensus estimates in Q2 2024, with an expected EPS of $2.47 compared to the consensus estimate of $2.44. The company’s net income increased by 15% year-over-year in FY2023, driven by higher revenues and lower operating expenses. This trend continued in the first quarter of 2024, and is expected to be reflected in the Q2 results as well. Overall, Visa is projected to report an annual GAAP EPS of $9.74 in FY2024.
The stock price estimate for Visa is 12% above the current market price, based on an EPS estimate of $9.74 and a P/E multiple of just above 31x in fiscal 2024. This translates to a price of $301 per share. Ultimately, while uncertainties in the macroeconomic environment could impact Visa’s performance in the next 12 months, the company’s strong fundamentals and track record of growth indicate a positive outlook for investors.
