Visa Inc. (V) will report fiscal first-quarter 2015 earnings results on Jan 29, 2015. In the last quarter, it posted a 3.32% positive earnings surprise. Let us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
Visa undertook quite a few initiatives in the past quarter that are expected to contribute positively to earnings. These include collaboration with five strategic community partner organizations for creating a “Healthy & Vibrant” San Francisco and awareness efforts to promote chip adoption in the U.S. Moreover, the company enabled eligible Visa cardholders in the U.S. to use Apple Pay, the payment service of Apple Inc. (AAPL) to use their new iPhone for making purchases at select U. S. merchants.
However, the deteriorating credit quality of the market, increased competition, and several state and federal lawsuits such as litigations where interchange rates are violated could mar the positives of Visa.
Earnings Whispers?
Our proven model does not conclusively show that Visa is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.20%. This is because the Most Accurate estimate stands at $2.47 per share while the Zacks Consensus Estimate is pegged at $2.50 per share.
Zacks Rank: Visa has a Zacks Rank #3 (Hold) which increases the predictive power of ESP; but when combined with a -1.20% ESP, it makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the finance sector you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Chubb Corporation (CB) with an Earnings ESP of +1.39% and a Zacks Rank #1 (Strong Buy).
Aon plc (AON) with an Earnings ESP of +1.08% and a Zacks Rank #3.
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