When you think credit cards, the most widely accepted worldwide happen to be Visa (V +0.41%) and MasterCard (MA +0.70%). They both reported earnings yesterday, with MasterCard releasing in the morning and Visa checking in after hours. While MasterCard celebrated a small bump based on its earnings, Visa has done better this morning, with shares trading as much as 3.3% from yesterday's close. Let's take a closer look at the earnings to see what everyone is so excited about.
What analyst were expecting
Visa went into this earnings release beating expectations in four straight quarters, and the earnings beat continued this quarter. With analysts expecting a 18% climb to $1.50 per share, Visa checked in slightly higher at $1.54 a share. Revenues were also up slightly over expectations, coming in at $2.73 billion against the expected $2.67 billion. Overall, it was a great quarter for Visa, and it is easy to see why investors are excited this morning.
What happened during the quarter
A large factor in driving earnings higher was an increase in total processed transactions, which increased by 2% to 14 billion. One number that jumped out to me was the dollar amount of transactions processed during the quarter, which increased 6% to $1 trillion. Yes -- trillion. And while MasterCard checked in with 1.9 billion cards issued through the quarter, Visa didn't have final numbers through September but showed nearly 4.1 billion cards through the end of June, firmly cementing themselves as the largest credit card company in the world.
On the heals of a previously announced 50% increase to its dividend, Visa used its earnings release to announce a new $1.5 billion stock repurchase, which will be in addition to the $174 million that was spent during the quarter repurchasing shares. These policies will continue to make Visa great at returning value to shareholders, and new CEO Charles Scharf doesn't seem like he will be changing course in the near future either.
