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Electronic payments processor and Dow-30 component Visa (VFree Visa Stock Report) has reported fiscal 2014 second-quarter results (year ends September 30th). Revenues, at $3.16 billion, marked a 7% increase from the prior-year total, but fell short of our forecast of $3.33 billion. There was better news on the profitability front, however, with share net coming in at $2.20 (excluding a tax benefit of $0.32 a share), representing a 15% improvement from the year-earlier figure and topping our estimate by $0.06. Visa shares traded lower following the earnings release, as investors seemed to focus on the top-line miss rather than on the bottom-line outperformance. (It's worth noting that Visa stock has traded down nearly 15% in price since mid-January, when the equity touched an all-time high north of $230 per share.)

We view Visa's March-period results (revenues in particular) as a modest hiccup, and expect this to be another record-setting year for the company. Much of the progress we foresee will likely be driven by Visa's international business, which remain a standout performer. Indeed, revenues generated overseas (including Visa Europe) accounted for 45.8% of the total in fiscal 2013, up from 41.5% just three years earlier. Markets outside North America account for an ever-increasing piece of the pie, contributing 56.8% of total transaction volumes in the first quarter. (The most rapid growth is coming from Asia/Pacific (now 27.7% of the total), Latin America (14.5%), and the segment comprised of Central Europe, the Middle East, and Africa (14.6%). (All figures are presented on a constant-dollar basis.)

Another noteworthy trend the growing use of debit cards, up 3% year over year in the March term. Debit card transactions now contribute 56.9% of total revenues, compared with less than 50% in the not-so-distant past. However, one downside is that consumers tend to use debit cards for smaller, day-to-day purchases, which places downward pressure on the dollar value per transaction.

In light of Visa's March-period results, we have adjusted our top- and bottom-line calls for fiscal 2014. We now anticipate revenues and earnings of $13.0 billion and $9.00 per share, respectively, versus our previous targets of $13.2 billion and $8.90. Meanwhile, we are introducing forecasts of $14.25 billion and $10.40 per share, respectively, for 2015. (Those figures would represent growth of 9%-10% and 15%-16% from our respective 2014 projections.)

We remain optimistic about Visa's long-term prospects, owing to the company's rock-solid finances (including a debt-free balance sheet), successful management, and ubiquitous brand name. This good-quality stock has above-average total return potential to the end of this decade, and the recent retreat presents a nice entry point, in our view. The dividend, although modest in absolute terms, should appeal to investors looking to complement strong price appreciation potential with an income component.

About The Company:Visa Inc. is the world’s largest retail electronic payments network providing processing services and payment product platforms. This includes credit, debit, prepaid, and commercial payments, which are offered under the Visa, Visa Electron, Interlink, and PLUS brands. Visa/PLUS is one of the largest global ATM networks, offering cash access in local currency in more than 200 countries. Visa’s global network, VisaNet delivers value-added processing, including fraud and risk management.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.