• Visa stock up 7% ahead of Q4 results.
  • Expectations high on revenue and earnings beat.
  • Focus on cross-border and payment volume.
  • Expenses are expected to edge higher on increased marketing.

Visa is scheduled to report its Fiscal Q4 2021 results after the market closes on October 26, 2021. The electronic payment company heads into the earnings session on the back of an impressive and robust earnings track record as it continues to make solid moves into digital payments.

Chart showing Visa stock price action

The stock is up by about 7% year to date, having underperformed the overall market. Additionally, it has pulled back from all-time highs by about 6%, waiting to see if the Q4 results will be the catalyst to fuel bounce back after the recent correction lower.

The expectation is high that Visa will deliver better-than-estimated results on revenue and earnings, driven mainly by growth in digital payments. Additionally, increased use of Visa cards on cryptocurrencies is also expected to fuel sales growth. In the first half of the year, customers spent over $1 billion worth of cryptocurrency on crypto-linked cards.

Visa is poised to report its Q4 results, having seen its operational metrics such as payment volumes, processed transactions, and cross-border volumes take a significant hit last year due to the pandemic. With the opening of the global economy amid the easing of COVID-19 fears, the company is likely to have bettered its results year-over-year.

Q4 earnings expectations

Wall Street expects Visa to post earnings of $1.53 a share for its fourth quarter representing a 36.61% year-over-year increase. The electronic payment giant delivered adjusted EPS of $1.49 F2021 in the third quarter, up 41% year over year.

Image showing Visa earnings beat since 2017

Sales are expected at $6.48 billion, representing a 27.07% year-over-year increase. The increase will mostly be driven by consumers increasingly adopting digital payments via Visa cards in the face of the pandemic. Sales in the third quarter were up 27% year-over-year to $6.1 billion, benefiting from the re-opening of global economies.

Visa draws revenue asset percentage of the total transaction every time a customer uses their visa card. The higher the spending on the cards, the more revenues that the company is able to generate in the form of transaction processing fees.

What to look out for when Visa reports

In the first nine months of the year, Visa registered significant growth in payments volume and number of processed transactions. Payments volume was up 34% as cross-border volume increased by 47%, waiting to see if the momentum continued in the fourth quarter.

The focus will also be on operating expenses likely to have edged higher as the company stepped up investments for marketing and other key initiatives to capture growth opportunities.

Additionally, investors will also pay close watch to the level of transactions that Visa crypto cards continue to handle. Cryptocurrencies have been on a roll in recent months amid increased interest. Transactions have edged significantly higher as people try to profit from the price changes.

Bottom line

Visa is on course to deliver better-than-expected Q4 results driven by reopening-driven recovery. Credit and face-to-face spending has bounced back significantly amid the easing of COVID-19 restrictions worldwide. Debit and e-commerce volume have continued to show signs of improvement compounded by increased cross-border travel spending.

Visa stock is likely to move higher on revenue and earnings coming above consensus estimates and representing year-over-year growth. Likewise, if the results fall short of expectations, the pullback from record highs is likely to continue.