Visa Inc (NYSE: V) has posted better than expected results in the third quarter of FY 17 and has raised its annual earnings forecast. As a result, the stock rallied over 1.4% on July 21st, 2017 (as of 10:50AM EDT; Source: Google finance). Visa stock has risen 26.7% in the last one year (source: Google Finance).
Visa, has benefited from increased consumer spending in the United States as well as results from Visa Europe, which it bought last June for about $23 billion in the third quarter. Overall, the net income grew to $2.06 billion (1.59 billion pounds), in the quarter from $412 million.
V in the third quarter of FY 17 has reported the adjusted earnings of 86 cents per Class A share, beating the analysts’ estimates for the adjusted earnings per share of 81 cents according to Thomson Reuters. The company had reported the adjusted revenue growth of 26 percent to $4.57 billion in the third quarter of FY 17, beating the analysts’ estimates for revenue of $4.36 billion.
The volume of Visa’s U.S. payments grew 12.1 percent on a constant dollar basis to $840 billion in the third quarter. More than half its total volume of transactions comes from the United States. Visa Europe has generated $371 billion in payments volume. However, the results from the Europe unit are not part of Visa’s prior-year quarter. The cross-border volumes, which is the value of transactions made outside of the United States, grew 11 percent in the third quarter when adjusted to include Visa Europe’s results in the year-ago quarter. Visa has benefited from a “sharp increase” in cross-border commerce into the United Kingdom due to a weaker pound following Britain’s vote to leave the European Union.
Additionally, Visa is also trying to make inroads in China as the company has filed an application with the People’s Bank of China for a domestic license. The company has been trying to get more of its cards to be issued by Chinese banks to consumers for use inside the country. The U.S. and Chinese governments reached an agreement in May that is supposed to result in more access to the Chinese economy for electronic-payments providers. That has reignited hopes that Visa and Mastercard may get more market share in China.
Visa has also raised its forecast for full-year earnings and revenue due to the strong growth in cross border volumes. The company now expects the annual adjusted earnings per share to grow about 20 percent, up from an earlier expectation of growth in the mid-teen percentage digits. Visa expects the net revenue to rise about 20 percent in the year ending September 30, up from an earlier expectation of a 16 to 18 percent increase.