The 10-second takeaway
For the quarter ended March 31 (Q2), Visa beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded. Non-GAAP earnings per share expanded significantly. GAAP earnings per share dropped significantly.
Gross margins contracted, operating margins grew, net margins contracted.
Visa logged revenue of $2.96 billion. The 32 analysts polled by S&P Capital IQ expected to see sales of $2.87 billion on the same basis. GAAP reported sales were 15% higher than the prior-year quarter's $2.58 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.92. The 33 earnings estimates compiled by S&P Capital IQ predicted $1.81 per share. Non-GAAP EPS of $1.92 for Q2 were 20% higher than the prior-year quarter's $1.60 per share. GAAP EPS of $1.36 for Q2 were 29% lower than the prior-year quarter's $1.91 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 83.6%, much worse than the prior-year quarter. Operating margin was 62.9%, 60 basis points better than the prior-year quarter. Net margin was 42.9%, 720 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $2.90 billion. On the bottom line, the average EPS estimate is $1.77.
Next year's average estimate for revenue is $11.69 billion. The average EPS estimate is $7.47.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 4,876 members out of 5,141 rating the stock outperform, and 265 members rating it underperform. Among 1,057 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,014 give Visa a green thumbs-up, and 43 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Visa is outperform, with an average price target of $174.06.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.