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 Visa Inc. (V - Free Visa Stock Report), a global leader in electronic payments processing, has reported results for the second quarter of fiscal 2017 (year ends September 30th). The Dow-30 member registered $4.48 billion in revenues for the latest three-month period, compared with our estimate of $4.23 billion and the year-earlier tally of $3.63 billion. On the bottom line, adjusted earnings were $0.86 a share during the March term, versus our target of $0.79 and the $0.68 logged in the prior year. (Both revenues and share net set, or matched, quarterly records for the company.) Visa shares, which have closely mirrored the broader market over the past year, are trading nicely higher in pre-market trading following the second-quarter release.

Visa's vast electronic payments network has been firing on all cylinders for some time now. On point, payments volume jumped 37% in the latest period, from the year before, to a staggering $1.7 trillion. Elsewhere, cross-border transactions, which stalled a bit in the middle of calendar 2016, have picked up the pace in recent periods; the measure soared 132% during the three months ended in March (11% if Visa Europe is included in the previous year's results). All told, Visa processed 26.3 billion transactions in the most recent quarter, marking a 42% advance from the comparable period of 2015, or a still-decent 12% improvement if Visa Europe is factored in to last year's numbers. (All figures in our report are presented on a constant-dollar basis.)

To no surprise, Visa's international operations (its business outside North America), which now account for 60% of companywide volumes, versus less than 50% in the not-so-distant past, turned in another solid performance in the second quarter. Specifically, volumes in Latin America, Asia/Pacific, and the segment comprised of Central Europe, the Middle East, and Africa increased 11%, 3%, and 7%, respectively. By the same token, its domestic business (including the U.S. and Canada) was certainly no slouch, with volumes up 10% year over year.

With the first half of fiscal 2017 in the books, this is shaping up to be another record-setting year for Visa. In a nutshell, revenues ought to expand 15%-17% for the full year, to $17.5 billion, the operating margin should land in the mid-60% range, and the tax rate will probably be in the low-30% vicinity. All told, we expect earnings to improve 15%-17% this fiscal year, to $3.30 a share. We're initiating top- and bottom-line estimates for fiscal 2018 of $19.5 billion and $3.85 a share, respectively, representing growth of 11%-13% and 15%-17% from our 2017 projections.

Top-quality Visa shares (Safety rank: 1) would make a good addition to most investment portfolios. Management continues to return capital to stockholders; Visa bought back 41.4 million shares through the first half of fiscal 2017, at a cost of $3.5 billion; and the board recently authorized a new $5.0 billion stock-repurchase program. Too, we expect the dividend to be raised 15%-20% annually to late decade, and long-term total return potential is decent on a risk-adjusted basis.


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.