Visa Inc. (V) is scheduled report its fiscal fourth quarter and full-year 2009 financial results on Tuesday, October 27, 2009. In the last five quarters, the company's actual earnings exceeded the market's consensus significantly.
Analysts estimates for the quarter ending September 2009 (Q4) range from a low of $0.65 to a high of $0.75, with a consensus of $0.71. For the fiscal quarter ending September 2009, the consensus EPS forecast has remained the same over the past week at $0.71 and increased over the past three months from $0.68 to $0.71 (4.41%).
Earnings for the third quarter on an adjusted basis were $0.98 per diluted share, and were positively impacted by the sale of our 10% equity ownership in Visa Net Brazil. Since there is no such development in the fourth quarter, the company is likely to report lower Q4 results compared to Q3. However, on an adjusted pro forma basis that excludes Visa Net Brazil gain, Visa is likely to report higher earnings in Q4 compared to Q3 which means the earnings are likely to come above $0.67 per share. Overall, the company is on target towards meeting its full-year adjusted EPS guidance of better than 20% growth.
The increase in earnings is driven by both increasing transaction volumes and returning consumer confidence. Transactions processed over Visa's network, which are reported on a real-time basis, are expected to total $10.8 billion in the fiscal fourth quarter, an increase of 4.8% over the previous quarter. Also, revenues from processed transactions, which currently generate approximately 30% of the company's gross revenue, is expected to post solid growth as the underlying secular shift to Visa electronic payments continues. I also see little variance in average ticket sizes, which are down 10% from the prior year period but on a sequential quarter basis appear to have leveled off.
Visa's adjusted operating margin is expected to be 53%, in line with its low 50s margin guidance for all of 2009. On an adjusted basis, operating expenses for the fourth quarter is likely to decline driven by lower costs in personnel, marketing and professional fees. The company's focus on expense reduction continues to be broad-based and driven by merger related efficiencies. As expected, there was an up-tick in marketing spend in the third quarter on a sequential basis, and I expect to see a similar step up in the fourth fiscal quarter as well.
The company's stock closed Friday at $74.12, compared to the 52 week range of $41.78 and $76.99. The stock seems to be trading at appropriate levels.
