Visa Inc. reported Fiscal Q4 EPS of $2.18, beating street
consensus of $2.11 by 3.3%. This EPS figure is up 17% YoY, from $1.85 in Q4
fiscal 2013. This marks Visa’s fourth consecutive earnings beat. The stock is
currently trading at $234.34, up ~9% from yesterday’s close- pushing to our
price target.
Total net operating revenues for the quarter were $3.3BB
compared to our estimates of $3.6BB, and an increase of 8.6% from the prior
year’s quarter. Of this, Q4 service revenues came in at $1.5BB (up 8% YoY) and
data processing revenues were $1.3BB (up 4% YoY). Total processed transactions
for the quarter were $16.9BB, up 9% from the prior year, very much in line with
the original investment thesis. Growth in emerging markets continue to drive
top line growth.
The company continues to show effort in returning cash to
shareholders. Visa authorized a new $5B share repurchase program, in addition
to the previous 20% quarterly dividend increase.
After updating our model and checking our investment thesis,
we believe the market has fully priced in future revenues that were being
discounted originally, and the stock is now fully valued.
We are booking a capital gains return of 16%, excluding
dividends, which would bring us closer to the 20% originally forecasted. We are pleased with Visa being a strong part
of our portfolio, and will continue to monitor the stock for another buying
opportunity.
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