Shares of Visa Inc. (NYSE:V) slid 0.5% at $179.99 in after-hours trading on Tuesday, although the company exceeded forecasters’ expectations on adjusted earnings for the third quarter of fiscal 2019 by 5 cents, posting $1.37 per share. Adjusted earnings per share were up 14% from the prior-year quarter.
The San Francisco-based worldwide payments technology operator also reported GAAP earnings of $1.37 per share, reflecting a 36% increase year-over-year.
Third-quarter revenue rose 11% to $5.8 billion, beating consensus estimates by $140 million. The growth was driven by:
· 9% increase on constant currency in payments volume.
· 7-9% increase on constant currency in cross-border volume.
· 12% increase in processed transactions to 35.4 billion.
Exchange rate shifts impaired net revenue growth by 2 percentage points, while the adoption of the new revenue accounting standard had a positive impact on the growth by 1.5 percentage points.
By segment, service revenues rose 10% to $2.4 billion and data processing revenues grew 13% to $2.7 billion. International transaction revenues increased 8% to $2 billion and other revenues went up 49% to $342 million.
Client incentives, that Visa deducted from gross revenues during the quarter to obtain net revenues, were $1.5 billion or nearly 21% of gross revenues. Client incentives increased 13%.
Adjusted operating expenses climbed 10% to $1.3 billion as a result of higher general and administrative expenses as well as marketing costs.
For full fiscal 2019, the company targeted low double-digit growth in revenue, low-single digit decline in GAAP expenses and 10% increase in non-GAAP expenses. Client incentives as a percentage of gross revenues is expected to be approximately 21.75%, and the effective tax rate around 19.75%.
Moreover, per diluted share of class-A common stock, GAAP earnings are forecasted to grow by 11-14%, and non-GAAP earnings by 16-19%.
As of June 30, the balance sheet of Visa had $14.1 billion in cash and short-term securities, and $16.7 billion in long-term debt. The equity was worth $35.3 billion.
Shares of Visa Inc. closed at $180.9 on Tuesday for a market capitalization of $407.56 billion. The stock climbed 27% over the past year through July 23 to above the 200-, 100- and 50-day simple moving average lines. The closing price on Tuesday was 48.8% above the 52-week low of $121.60 and only 0.52% from the 52-week high of $181.84.
Wall Street recommends to buy VISA and has produced an average target price of $191.06.
Disclosure: I have no positions in any security mentioned.
Read more here:Â
Consider Americas Silver Corp For Next Silver Bull MarketÂ
Coca-Cola Moves Higher After Releasing 2nd Quarter NumbersÂ
3 Mid-Cap Stocks With High Earnings YieldsÂ
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
