PreMarket Prep Stock Of The Day: Analyzing Visa's Earnings Move

In what has been so far a mixed first-quarter earnings season, with some big beats and big misses, Visa Inc. V provided investors with a good print. The price action following its report makes it the PreMarket Prep Stock of the Day.

Visa Moves Up With The Market: Whereas the S&P 500 index made its low for the year on Feb. 24, Visa did not find a bottom until March 8 at $186.87. That came in just above its November 2020 low of $183.89.

Its high for the rebound arrived a few days after the index peaked on April 4 at $229.24.

Visa Moves Down With The Market: Similar to the index, which retreated from its recent peak, so did Visa. Yet the index has come much closer to its previous lows than Visa has. In fact, the low for the recent slide was made on Tuesday at $201.10, roughly $15 above its yearly low.

Visa's Q2 Report: While the index was fluctuating wildly as the mega-cap tech companies were reporting, Visa released its report. The quarterly earnings of $1.79 per share beat the analyst consensus estimate of $1.65 by 8.48%.

This is a 29.71% increase over earnings of $1.38 per share from the same period last year. The company reported quarterly sales of $7.2 billion, which beat the analyst consensus estimate of $6.84 billion by 5.26%.

This is a 25.68% increase over sales of $5.73 billion in the same period last year.

On its earnings call, Visa forecasted accelerated sales growth vs. pre-COVID levels "over coming years."

PreMarket Prep's Take On Visa: When the issue was being covered on the show Wednesday, it was trading at the $213, in the green by $12. Co-host Dennis Dick, who owns Mastercard Inc. MA, said: “If owned it, I would be tempted to sell into the rally.”

The author of this article underestimated the potential upside in the issue, citing the four-day high of $216.56 as an upside target above the current price.

V Price Action: After a much higher opening ($217.37 vs. $201,10), it had a brief dip to $215.66 and then ripped all the way to $221.80 before reversing course.

The stock was trading 6.91% higher at $214.99 late in Wednesday's session. 

The discussion on the issue from Wednesday’s show can be found here: