Visa (NYSE:V) will announce third-quarter 2021 results on Tuesday, October 26, after markets close. Visa expects to beat consensus earnings and earnings forecasts. The world’s largest e-payments company topped expectations with net sales of $6.1 billion in the previous quarter, up 27% year-on-year. This growth was driven by a 54% increase in international transaction revenue on an annual basis, followed by a 32% increase in domestic processing revenue.
Sales benefited from increased consumer demand and the easing of travel restrictions related to Covid-19. In addition, net income for the quarter was $2.6 billion, up 9% year-on-year due to higher net sales and partly offsetting higher corporate income taxes due to the revaluation of deferred tax liabilities in the UK. Ricefield. A similar trend is expected in the fourth quarter (October-September).
Our estimate is the Visa rating. At $279 per share, that’s 21% above the current market price of just under $231. Visa Sales Preview Interactive Dashboard Analysis There are details.
(1) Revenue is expected to exceed consensus estimates
Visa sales (net sales) for 2020 were $21.8 billion, down 5% from the previous quarter. This was due to a 19% decrease in international transaction revenue on an annual basis, partially offset by a 6% increase in computing revenue and a 1% increase in service revenue, respectively.
Visa generates almost 35% of its total revenue from international transactions, but will drop to 29% by 2020. The revenue stream depends directly on the volume of cross-border transactions. Due to Covid-19-related restrictions, the company saw a slight decline in cross-border trade in 2020, resulting in a 19% year-over-year decline in international trade revenue to $6.3 billion.
However, volume recovered somewhat in the first nine months of 2021, increasing 4% year-on-year. Most of the growth occurred in the third quarter, with segment revenue growing 54% year-on-year. This is due to the easing of travel bans, increased consumer demand, and a rapidly expanding Covid-19 vaccination programme. We expect the same trend to continue in the fourth quarter.
The company said its computing and service revenues increased 6% and 1% year-over-year in 2020, respectively, but growth was slower than last year.
Revenue from data processing depends on the number of transactions processed, revenue from services depends on the volume of payments. Both have been ravaged by the impact of the Covid-19 crisis in the space of a year. However, a similar increase was seen in the first nine months of 2021, with domestic payments increasing 11% annually. We expect the pace of growth to continue in the fourth quarter.
Overall, Visa’s revenue is expected to reach $24.1 billion in 2021.
Trefis expects Visa’s third-quarter 2021 revenue to be around $6.55 billion, slightly above the consensus estimate of $6.52 billion. We anticipate that cross-border transaction volumes and increased domestic payment traffic will deliver results for the fourth quarter.
Due to the economic recovery and deregulation related to Covid-19, transaction volume is expected to increase in the future. Visa Revenue Dashboard It contains details of the company’s business areas and forecasts for the next two years.
2) EPS may exceed consensus estimates
Adjusted earnings per share for Visa 2021 fourth quarter is projected to be $1.65, according to Trefis analysis, nearly 7% above the consensus forecast of $1.54. The company’s adjusted net profit fell 10% year-on-year to $10.9 billion in 2020, driven by lower net sales and higher operating costs as a percentage of sales.
Moreover, the same trend can be seen in the first and second quarters of 2021, with net profit falling by 4% and 2%, respectively, on an annual basis. However, positive growth in the top row changed the pattern in the third quarter. We expect that profitable revenue growth and reduced operating costs as a percentage of revenue will contribute to fourth quarter profitability.
Visa’s net profit margin is expected to increase slightly in the future in 2021, and adjusted net profit is expected to grow 13% year over year to $12.3 billion. This could result in an EPS of US$5.63.
(3) The stock price is estimated to be 21% above the current market price
Visa assessment for arrival. The estimated EPS for 2021 is around $5.63 and the P/E ratio is just under 50x. This equates to a price of $279, which is 21% above the current market price of around $231.