Visa (V) Extends Rally, Further Upside is Likely

Visa’s (NYSE:V) share price sharply spiked by 1.5% after topping revenue and earnings estimates for the first quarter by $160 million and $0.07 per share, respectively. In addition, a new share buyback plan of $5 billion also added to trader sentiment. Since the start of this year, Visa’s stock price gained almost 16%, spurred by its strong market fundamentals and increasing financial numbers.

The Credit Services Company also offers a decent dividend yield of 0.72%. In the latest quarter, Visa returned about $2.1 billion to shareholders through dividends and share repurchases.

In the first quarter, its operating revenue increased 23% to $4.5 billion, compared with the prior-year period, thanks to processed transactions, the inclusion of Europe, and continued growth in payments volume and cross-border volume. Its payments volume increased 37% to $1.7 trillion over the same period last year.

Cross-border volume growth was standing around 132%, while total Visa processed transactions surged 42% to $26.3 billion compared to the year-ago period.

“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc.

After repurchasing $1.7 billion of common stock in the first quarter, the company authorized a new buyback plan of $5 billion, which will have a huge impact on share price performance and earnings per share. The company says they have $7.2 billion of available funds for buybacks, representing the company’s cash position and strategy to return increasing cash to investors. Its future fundamentals also look strong, as it is set to generate net revenue growth of 16% to 18% this year. Therefore, Visa shares are likely to extend the rally.

THe author does not own Visa shares.

Alexander is an analyst for who specializes in index and commodity trading. His outlook is usually near-term to medium-term. He has over 10 years of experience in the financial industry and began his career at the dealing desk. Alexander holds a Bachelor’s degree in Economics from University of Delaware.