Tuesday, October 27, 2009

Visa Q4

Visa Inc,V, posted higher-than-expected quarterly earnings on Tuesday, as consumers used their debit cards more, and the company raised prices, sending shares up 2.4 percent.The world's largest payment network also authorized a $1 billion share repurchase plan, and said the decline in payment volume was easing in the United States, in the first sign of stabilization on its business since the financial crisis.

Net income was $514 million, or 69 cents a share, for the fourth quarter ended September 30, compared with a net loss of $356 million, or 45 cents, a year earlier.
Net operating revenue rose 10 percent to $1.9 billion, beating analysts estimates of $1.8 billion, helped by higher prices and higher transactions. On an adjusted basis, quarterly net income rose 23 percent to $552 million, or 74 cents per share.

The payment network reiterated net revenue growth at the lower end of the 11 percent to 15 percent range in its fiscal 2010 year, and annual diluted class A common stock earnings per share growth of more than 20 percent.

Visa forecast marketing expenses of less than $1 billion in 2010, and capital expenditures in the $200 million to $250 million range, up to one-third less than in 2009.The company also estimated earnings per share will rise more than 20 percent in its 2011 fiscal year.

Visa continues to be one of our most consistent performers in our portfolio. Increased debit transactions was the main focus of our thesis and this is proving to be the main driver of their operations, since they have the largest market share. Increasing transaction prices have also increased their incomes and the company is still finding ways to cut expenses down. The company is looking to increase EPS by 20% for 2010. They have one of the best management teams and management has done a great job keeping this company profitable and healthy. This company keeps getting stronger and I believe will perform better as the general payment method keeps shifting from paper to plastic methods, along with an increase in debit transactions for the upcoming holiday season.

-Richie Civello

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