A month has gone by since the last earnings report for Visa (V). Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Visa due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Visa Inc. before we dive into how investors and analysts have reacted as of late.
Visa Q2 Earnings Beat Estimates on Payment Volume Strength
Visa delivered second-quarter fiscal 2026 adjusted earnings of $3.31 per share, up 20% year over year and ahead of the Zacks Consensus Estimate by 7.1%. Net revenues came in at $11.23 billion, rising 17% year over year and topping the consensus mark by 5%.
The strong quarterly results reflected resilient spending trends, higher cross-border volumes andsolid network activity, including a 9% year-over-year increase in payments volume on a constant-dollar basis.However, the upside was partly offset by increased operating expenses.
Visa’s Q2 Highlights
On a constant-dollar basis, cross-border volume increased 12% year over year, reflecting steady travel and e-commerce activity. Excluding transactions within Europe, cross-border volume rose 11% in constant dollars.
Network throughput also improved. Total processed transactions were 66.1 billion for the March quarter, marking a 9% year-over-year increase.
Adjusted operating expenses were $3.6 billion, up 17% year over year and in line with our model estimate. Higher personnel costs of $1.8 billion and marketing expenses of $545 million were notable contributors, alongside general and administrative expenses of $450 million. The litigation provision totaled $329 million in the quarter, down sharply from $1 billion a year ago.
V’s Segment Performance
Service revenues increased 13% year over year to $4.98 billion and beat our model estimate of $4.92 billion, supported by expanding payment volumes. Data processing revenue climbed 18% to $5.54 billion and beat our estimate of $5.36 billion, pointing to healthy growth in transactions processed across Visa’s network.
International transaction revenues rose 10% to $3.63 billion and beat our model estimate of $3.56 billion, while other revenue advanced 41% to $1.32 billion, beating our estimate of $1.14 billion. Offsetting a portion of these gains, client incentives, recorded as a contra-revenue item, increased 14% to $4.25 billion. It came a bit lower than our estimate of $4.27 billion.
Visa Returns Capital Aggressively
Visa continued to emphasize shareholder returns. During the quarter, the company repurchased $7.9 billion of class A shares and paid $1.3 billion in dividends, totaling $9.2 billion returned to shareholders. The company had leftover authorized funds of $13.2 billion under its repurchase program as of March 31, 2026. The board also authorized a new $20 billion multi-year share repurchase program in April.
Cash generation remained solid. Free cash flow was $2.6 billion in the quarter, after $383 million of capital expenditures. Visa ended March 31, 2026, with $14.2 billion in cash, cash equivalents and investment securities. Its long-term debt amounted to $22.4 billion, up from $19.6 billion at fiscal 2025-end. Current maturities of debt were at $1.6 billion.
V Outlines Strong Growth Targets Ahead
For the third quarter of fiscal 2026, Visa expects adjusted net revenue growth in the high-end of low-double-digit range and operating expense growth in the mid-teens, while projecting adjusted earnings per share growth in the high-single-digit range.
For fiscal 2026, the company anticipates adjusted net revenue growth in the low-teens range and operating expense growth in the mid-teens range. Adjusted earnings per share are expected to grow in the mid-teens.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Visa has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Visa has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Visa Inc. (V): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).