Today's stock market
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Two companies reported quarterly earnings that beat expectations, but their shares went in opposite directions. Visa Inc. (NYSE:V) investors cheered its strong transaction growth, and General Electric Company (NYSE:GE) fell on concerns about the second half of the year.
Visa cashes in on the cashless wave
Global payments giant Visa delivered better-than-expected quarterly results on strong payment volumes and raised its outlook for the full year. Revenue in the company's fiscal third quarter totaled $4.6 billion, a 26% increase over last year and almost 5% over analyst expectations. Earnings were $0.86 per share, $0.05 better than anticipated. Visa stock finished the day up 1.2%.
Transactions during the quarter grew 44% year over year, and total payment volume on a constant dollar basis grew 38% to $1.9 trillion. The total was helped by the acquisition of Visa Europe, but even considering prior-year volumes in Europe, transactions were up 13%. The company increased its revenue guidance for the full year from 16%-18% growth to a projected gain of 20%. EPS guidance for growth in 2017 was raised from the "high end of mid-teens" to 20% as well.
"I'm pleased to report Visa's fiscal third quarter results which reflect strong growth in payments volume, cross-border volume, and processed transactions, which were powered by economic tailwinds in the U.S. and globally," said CEO Alfred Kelly Jr. in the press release.
Last night's report was the latest in a string of strong quarters that have powered the payment network operator's stock 28% higher this year. Besides reaping the benefits of purchasing of its European affiliate, Visa is riding the global trend toward cashless transactions, which is still in its early stages.
GE beats expectations but stirs up more worry
General Electric reported revenue and earnings that were better than observers expected, but that did nothing to dispel the cloud of pessimism around the stock, which fell 2.9% to a 52-week low. Revenue for Jeffrey Immelt's last quarter as CEO was $29.6 billion, a year-over-year decline of 12%, and non-GAAP earnings fell 45% to $0.28. Analysts were looking for EPS of $0.25 on revenue of $29 billion.
"GE's portfolio enables us to execute in a slow-growth, volatile environment, with Industrial segment organic revenues +2% and orders +6%," said Immelt in the press release. "The global scale of the Company, along with our ability to innovate industry-leading products and services, will help us navigate the current environment and unlock productivity across our businesses and markets."
GE reaffirmed its guidance for earnings and cash flow for the full year, but made some cautious statements about the oil and gas segment (which has been a source of concern lately) in the conference call. Profit from the segment fell 52%, and the company expects the numbers to be "lower than previously anticipated" in the second half.
The revenue and earnings declines are due to GE shedding businesses in an attempt to move to higher growth and stronger financials. But given all the moving pieces and the uncertainty around the CEO transition, comments about a "slow-growth environment" appear to have stoked investor concerns.