CHICAGO, May 9, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Visa Inc. (NYSE: V), MasterCard Inc.(NYSE: MA), Washington Post Company (NYSE: WPO), The New York Times Company (NYSE: NYT) and Kraft Foods Inc.(NYSE: KFT).
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Here are highlights from Friday's Analyst Blog:
Visa Gains Big Year Over Year
Visa Inc.'s (NYSE: V) fiscal second quarter 2011 (ended March 31, 2011) operating earnings of $1.23 per Class A common share were three pennies ahead of the Zacks Consensus Estimate of $1.20 per share, but substantially exceeded 96 cents reported in the year-ago quarter on lower share count.
Visa's GAAP net income for the quarter came in at $881 million, increasing 23.6% from $713 million in the year-ago quarter. Operating income climbed 23.3% year over year to $1.38 billion. Meanwhile, total GAAP operating expenses jumped 3.0% year over year to $862 million, in the reported quarter.
Total operating revenues for the reported quarter were $2.25 billion, up 14.6% from $1.96 billion in the year-ago quarter and slightly higher than the Zacks Consensus Estimate of $2.23 billion. While growth was driven by strong performance across segments, currency fluctuations contributed a positive 2% to the top line.
Service revenues increased dramatically by 23.5% year over year to $1.09 billion and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity.
Data processing revenues grew 13.0% over the prior-year period to $823 million. International transaction revenues, which are driven by cross-border payments volume, climbed 14.5% over the prior-year quarter to $624 million. Other revenues, earned through Visa Europe's licensing fee, were $156 million, declining 9.8% over the year-ago quarter. Client incentives, which are a contra-revenue item, were $451 million, representing 20% of gross revenues.
On a constant dollar basis, payments volume increased 13% year over year to $861 billion. Total processed transactions carrying the Visa brand increased 13% year over year to 12.0 billion. Cross border volume, on a constant dollar basis, grew 13% year over year.
As of March 31, 2011, cash and equivalents, restricted cash and available-for-sale investment securities were $6.6 billion, up from$5.9 billion as of September 30, 2010, including $3.0 billion of restricted cash for litigation escrow.
Long-term debt reduced to $25 billion from $32 billion at the end of September 2010. Total shareholders' equity was recorded at$26.2 billion, up from $25.0 billion as of September 30, 2010.
Visa's operating cash flow improved dramatically to $1.61 billion from $580 million as of March 31, 2010.
Guidance
Visa reiterated its projections for fiscal 2011, anticipating annual net revenue growth in the range of 11%-15%; annual operating margin of about 60%; GAAP tax rate of 36.5%-37.0% and capital expenditures of $250-$275 million.
Further, the company re-affirmed its client incentives within the range of 16.0%-16.5% of gross revenue; advertising, marketing and promotional expenses to be less than $900 million; annual earnings per share growth to surpass 20% and annual free cash flow to exceed $3 billion in fiscal 2011.
Our Take
Visa continues to drive growth through increased payment volumes along with consistent growth in processed transactions. The company benefits from strong secular demand growth, meaningful international exposure, high barriers to entry, excellent pricing power and impressive operating leverage.
Although regulatory compliances as a result of the ongoing financial overhaul in the U.S. and litigation are expected to weigh on the financials of the company in fiscal 2011 and ahead, Visa aims to retain its strength by exploring newer growth avenues that include mobile, eCommerce and money transfer services. The company is also generating strong cash flow and maintains a healthy capital position.
Meanwhile, Visa's prime peer, MasterCard Inc. (NYSE: MA) reported its first quarter earnings on Tuesday, with operating earnings per share of $4.29 that were significantly ahead of the Zacks Consensus Estimate of $4.10 and $3.46 in the year-ago quarter.
