Banking & Finance

Visa Lukewarm on 2016 Outlook, Will Acquire Visa Europe for $23 Billion

Visa Inc. (NYSE: V) reported fourth-quarter and full-year fiscal 2015 results before markets opened on Monday. For the quarter, the credit card issuer posted quarterly diluted earnings per share (EPS) of $0.62 and revenues of $3.57 billion. In the fourth quarter of 2014, Visa reported adjusted EPS of $0.54 on revenues of $3.23 billion. Thomson Reuters had estimates for EPS of $0.63 and $3.57 billion in revenue.

For the full year, Visa posted adjusted EPS of $2.62 on revenues of $13.88 billion, compared with 2014 adjusted EPS of $2.27 on revenues of $12.7 billion. Analysts were looking for EPS of $2.62 on sales of $13.88 billion.

In the company’s outlook for its 2016 fiscal year, Visa guided revenue growth to a range of high single-digits to low double-digits on a constant dollar basis, and it expects a 3% negative impact due to foreign currency translation effects. Adjusted annual EPS is forecast at the low-end of the mid-teens range on a constant dollar basis, and Visa expects a negative impact of about 4% from currency translation effects.

Based on fiscal year 2015 totals, Visa’s full-year revenues could range from around $15.00 billion to $15.55 billion. The consensus analysts’ estimate calls for revenues of $15.34 billion. Using an estimate of 13% EPS growth, we calculate 2016 EPS at $2.96. The consensus estimate calls for EPS of $3.00.

Visa did not repurchase any stock in the fourth quarter and buybacks for the year totaled 44.1 million shares at a cost of $2.9 billion. At the end of September, the company had $2.8 billion remaining in its current buyback program and has authorized a new $5 billion program as well.

CEO Charlie Scharf said:

The underlying growth of our franchise continued as evidenced by our strong payments volumes as well as new and renewed partnerships during the year. Most importantly, we continued to build our capabilities at the physical point-of-sale as well as in the digital space. Although fiscal 2016 reported growth rates will be negatively impacted by a strong US dollar and an uneven global economy, we are well positioned for strong success in 2017 and well beyond.

Visa also announced Monday morning that it has agreed to acquire Visa Europe in a deal worth an estimated $23.4 billion. Visa Europe has operated on its own since 2004.

Visa’s stock traded up about 0.2% in Monday’s premarket to $77.77, after closing at $77.58 on Friday. The 52-week range is $59.75 to $78.89. Thomson Reuters had a consensus analyst price target of around $83.36 before the report.

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