A month has gone by since the last earnings report for Visa (V). Shares have added about 4.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Visa due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Visa Q3 Earnings Beat Estimates on Cross-Border Volume Strength
Visa delivered third-quarter fiscal 2026 adjusted earnings of $3.32 per share, up 11% year over year and beating the Zacks Consensus Estimate by 2.8%.
Net revenues came in at $11.63 billion, rising 14% year over year and topping the consensus mark by 2.3%.
The strong quarterly results reflected resilient spending trends, higher cross-border volumes and solid network activity, including a 10% year-over-year increase in payments volume on a constant-dollar basis. However, the upside was partly offset by increased operating expenses.
Visa’s Q3 Highlights
On a constant-dollar basis, cross-border volume increased 13% year over year, reflecting steady travel and e-commerce activity. Excluding transactions within Europe, cross-border volume rose 12% in constant dollars.
Network throughput also improved. Total processed transactions were 71.7 billion for the June quarter, marking a 10% year-over-year increase.
Adjusted operating expenses were $3.88 billion, up 17% year over year. It came a bit higher than our estimate of $3.83 billion. Higher personnel costs of $2.46 billion and marketing expenses of $649 million were notable contributors, alongside general and administrative expenses of $503 million. The litigation provision totaled $253 million in the quarter, down sharply from $615 million a year ago.
V’s Segment Performance
Service revenues increased 14% year over year to $4.92 billion and beat our model estimate of $4.89 billion, supported by expanding payment volumes. Data processing revenues climbed 17% to $6.04 billion and surpassed our estimate of $5.94 billion, pointing to healthy growth in transactions processed across Visa’s network.
International transaction revenues rose 6% to $3.85 billion and beat our model estimate of $3.83 billion, while other revenues advanced 45% to $1.50 billion, topping our estimate of $1.21 billion. Offsetting a portion of these gains, client incentives, recorded as a contra-revenue item, increased 18% to $4.68 billion. It came in higher than our estimate of $4.51 billion.
Visa Returns Capital Aggressively
Visa continued to emphasize shareholder returns. During the quarter, the company repurchased $4.9 billion of Class A shares and paid $1.3 billion in dividends, totaling $6.2 billion returned to its shareholders. The company had leftover authorized funds of $28.4 billion under its repurchase program as of June 30, 2026.
Cash generation remained solid. Free cash flow was $6.1 billion in the quarter, after $417 million of capital expenditures. Visa ended June 30, 2026, with $13.9 billion in cash, cash equivalents and investment securities. Its long-term debt amounted to $20.9 billion, up from $19.6 billion at fiscal 2025-end. Current maturities of debt were at $3 billion.
V Outlines Strong Growth Targets Ahead
For the fourth quarter of fiscal 2026, Visa expects adjusted net revenue growth in the low-double-digit to low-teens range and operating expense growth in the high-end of low-double-digit while projecting adjusted earnings per share growth in the mid-teens range.
For fiscal 2026, the company now anticipates adjusted net revenue growth in the low-end of the mid-teens range and operating expense growth in the mid-teens range. Adjusted earnings per share are still expected to grow in the mid-teens.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Visa has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Visa has a Zacks Rank #3 (Hold). We expect an in-line 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).