Visa (NYSE: V) shares were up 5% following the company's better-than-expected fiscal Q3 earnings which showed it beating analysts' expectations on the top and bottom line. In addition, the company issued a better forecast than expected and also gave a more constructive picture of consumer spending than the current, prevailing recession narrative.
Visa is now the 13th largest company listed on U.S. exchanges, and it's quickly becoming an institutional favorite due to its liquidity, steady growth, and attractive business model which enables it to take a cut of transactions with minimal credit risk. Overall, Visa's shares are down about 2% YTD and about 14% off its all-time highs. Given its strong performance, it's likely that Visa will make new all-time highs if the bear market rally continues.
Inside the Numbers
In its fiscal Q3, Visa reported $1.98 in earnings per share which was well above analysts' consensus expectations of $1.74 per share. This was a 14% increase from last year. Revenue also topped expectations at $7.2 billion vs $7.06 billion and up 19% from last year.
Notably, the company's cross-border transactions exceeded pre-pandemic levels, indicating that international travel is also rebounding. Payments volume increased by 12% compared to last year on a constant currency basis, with the strongest segment being cross-border transactions which rose 40%.
However, shares gave up some gains due to a report from the Wall Street Journal that a bipartisan bill was being introduced by Senators Dick Durbin and Roger Marshall to create more competition in the $164 billion credit card market. The news sent Visa, American Express (NYSE: AXP), and Mastercard (NYSE: MA) shares lower.
Management sounded optimistic about the next quarter based on the first few weeks of its fiscal Q4. For the full year, it sees revenue growth in the high-teens to 20% range.
In regards to the economy, CFO Vasant Prabhu remarked: "We're seeing no evidence of a pullback in consumer spending. We keep looking for it, because we've heard some other people say it, and we're not seeing any evidence of that. If anything, affluent spending has been on the rise and is one of the reasons why we've seen some of the robust growth we saw this quarter."