1/31/2015 0 Comments
Visa reported Q4 revenue of $3.382 above consensus $3.34 - $3.38. Visa's Q4 EPS was $2.53 above consensus $2.50 - $2.51. Visa's results were solid, with expanding margins and attractive returns. Visa is bullish on the Apple Pay business. Visa also mentioned there would be more token-based electronic payment services offered in 2015. Visa is trading at 23x forward earnings, which is not excessive relative to it's own historical pe and relative to Visa's long-term earnings growth potential of 16%. Apple appears more attractive at 11x though.
Another interesting part of Visa's conference call was about the drop in gas prices and it's impact on household spending. Visa said gas prices have dropped 30% since June. Each household saves an average of $60 per month due to this drop in the price of gas. Visa says that their surveys show 50% of the energy savings is being saved, 25% is being used to pay down debt, and 25% is being spent at grocery stores, clothing stores, and restaurants. Visa also mentioned that they expect an increase in spending related to the energy savings in the discretionary industries of home improvement, electronics, and travel & entertainment.
Michael Grove, CFA