In a week chock full of big-name earnings reports, global payment technology company Visa Inc (NYSE:V) gets added to the mix on Thursday with its first-quarter results out after the bell. The numbers are expected to be solid, with earnings growing 16% to $0.79 a share and revenue increasing even faster, up 19% to $4.31 billion.
Visa stock traded well throughout most of the first quarter, but some choppy trading in the middle of March caused it to pull back toward its 50-day moving average (the blue line) from an all-time high of $92.05. The stock spent the intervening weeks consolidating above the indicator before starting a new move higher last Monday.
Even with the consolidation, V is easily outperforming the overall market so far in 2017, up more 14.6% while the S&P 500 has gained just 4.7%. And while it may not be fun to watch a stock move sideways, the action we’re seeing here is bullish. As long as Visa can hold above support around $88.38, its outlook will remain positive.
Visa has a solid track record when it comes to earnings, beating the Street in each of the last five quarters and in all but one of the last 11. However, buying any stock ahead of earnings is a major gamble, and is one scenario where I don’t like to place too much emphasis on historical patterns.
It’s true that V stock gapped higher on its last report, but for now, I believe the best strategy is to wait and see how the stock trades after the Street has had time to digest the numbers.
The conference call will be the most important, and investors should listen for any comments regarding the continued movement into e-commerce payments. Alfred Kelly, Jr., Visa’s CEO, made a point to reference the further digitizing of payments and e-commerce in the last quarterly call, and as cash becomes less and less important in the consumer world, Visa stock stands to benefit greatly.
As of this writing, the author did not hold a position in any of the aforementioned securities.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.
