Visa (V +0.17%) is pulling the Dow Jones Industrial Average (^DJI 0.16%) down after the payment processing giant reported positive earnings but lowered its forecast going forward. As of 1:20 p.m. EDT the Dow was down 130 points to 16,953. The S&P 500 (^GSPC +0.80%) was down 10 points to 1,978.
Visa stock is down 4% to $213.80 after the payment processing giant reported its fiscal third-quarter earnings last night. Earnings were up 11% year over year to $1.36 billion, while earnings per share were up 15% to $2.17 per share. That's up from $1.89 per share a year ago and above analyst expectations of $2.10 per share. EPS growth was higher than regular earnings growth, as the company has been buying back shares over the course of the year. In Q3, Visa purchased 5.6 million shares at an average price of $207.13 for a total of $1.2 billion. The company has $1.9 billion remaining under the board's buyback authorization.
Visa's Q3 revenue came in at $3.16 billion, up 5% year over year from $3 billion and slightly above analyst expectations of $3.15 billion. Revenue growth was affected by the stronger dollar and a decrease in cross-border transactions; it would have been up 7% year over year if currency prices had remained constant. The positive results were led by 11% growth in total processed transactions.
Despite the positive earnings, Visa is losing value because the company lowered its revenue guidance for the year to 7%-8% growth (9%-10% growth on a constant currency basis), down from a previous forecast of 10%-11% growth. CEO Charles Scharf said: "We feel very confident that the headwinds will dissipate. What we don't know is the timing."
Following the lowered guidance, multiple analysts cut their earnings estimates for Visa, which is weighing on the stock today. With the stock trading at nearly 25 times trailing 12-month earnings, it doesn't take much to make it drop.
Visa is relatively small compared to other Dow stocks based on market capitalization. However, because the company has the highest stock price on the Dow, is has an outsize effect on the index. Across the broader stock market, it is the services, health care, and utilities sectors that are pulling the market down.
Source: Finviz.com.
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