Why Visa (V) is about to beat revenue estimates again
LLooking for a stock that has consistently outperformed earnings estimates and could be well positioned to keep the streak alive in its next quarterly report? Visa (V), which belongs to Zacks’ financial transaction services business, might be a great candidate to consider.
This global payment processor has an established reputation for exceeding revenue estimates, especially when looking at the previous two reports. The company posted an average surprise for the last two quarters of 7.28%.
For the most recent quarter, Visa is expected to post earnings of $ 1.27 per share, but it reported $ 1.42 per share instead, which comes as a surprise 11.81%. For the previous quarter, the consensus estimate was $ 1.09 per share, when it actually produced $ 1.12 per share, a surprise of 2.75%.
Thanks in part to this story, there has been a favorable change in revenue estimates for Visa in recent times. In fact, the Zacks ESP benefits (Expected surprise forecast) for the stock is positive, which is a great indicator of a profit beating, especially when combined with its strong Zacks rank.
Our research shows that stocks combining a positive earnings ESP and Zacks # 3 (Hold) rank or better produce a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could reach seven.
Zacks Earnings PSE compares the most accurate estimate to Zacks’ consensus estimate for the quarter; The most accurate estimate is a consensus version of Zacks whose definition is linked to change. The idea here is that analysts who revise their estimates just before the results are released have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.
Visa has a profit ESP of + 4.42% at the moment, which suggests that analysts have become bullish on its near-term profit potential. When you combine this positive ESP result with Zacks # 3 rank of the action (Hold), it shows that another beat may be just around the corner.
With the Earnings ESP metric, it is important to note that a negative value reduces its predictive power; however, a negative earnings ESP does not indicate a shortfall.
Many companies end up beating the consensus EPS estimate, but that might not be the only reason their shares are rising. On the other hand, some stocks can hold up even if they end up missing the consensus estimate.
For this reason, it is really important to check a company’s ESP earnings before it is published quarterly to increase the chances of success. Make sure to use our Income ESP Filter to find the best stocks to buy or sell before declaring them.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.