Why Visa (V) Experienced a Greater Decline Than the Market

Recently, Visa (V - Free Report) closed at $285.28, reflecting a decline of -1.84% from the prior trading day. This drop is notably steeper compared to the broader market, as the S&P 500 had only a slight loss of 0.05%. In contrast, the Dow Jones experienced a minor decrease of 0.02%, while the technology-heavy Nasdaq actually rose by 0.18%.

Recent Performance Comparison

Over the last month, Visa's shares have fallen by 0.62%. This performance lags behind the Business Services sector, which has seen a gain of 3.48%, and the S&P 500, which has increased by 2.76% during the same period.

Upcoming Earnings Announcement

As investors look ahead, Visa's upcoming earnings report on October 29, 2024, is highly anticipated. Analysts forecast that the company will report earnings of $2.58 per share, which would represent a year-over-year increase of 10.73%. Additionally, it's expected to generate revenues of $9.48 billion, showcasing a 10.14% rise compared to the same quarter last year.

Analysts' Estimates and Rankings

Investors should also monitor any recent changes in analysts’ estimates for Visa. These revisions can indicate shifting business trends. Positive changes in estimates are often seen as a favorable sign for a company's outlook.

Research shows that adjustments in earnings estimates correlate well with stock price movements. To help investors capitalize on this, the Zacks Rank system has been developed. This model aggregates estimate changes and assigns a rating from #1 (Strong Buy) to #5 (Strong Sell). Historically, stocks rated #1 have returned an average of +25% annually since 1988. In the past month, the consensus EPS estimates for Visa have increased slightly by 0.1%, placing it at a Zacks Rank of #3 (Hold).

Valuation Metrics

Visa’s current Forward Price-to-Earnings (P/E) ratio stands at 25.86, which is higher than the industry average Forward P/E of 17.83. Moreover, Visa has a PEG ratio of 1.98. This metric is similar to the P/E ratio but also considers the expected earnings growth rate. The Financial Transaction Services sector has an average PEG ratio of 1.3 based on recent closing prices.

Industry Context

The Financial Transaction Services sector falls under the broader Business Services category. This sector is currently rated with a Zacks Industry Rank of 99, placing it in the top 40% of over 250 industries. Research suggests that industries in the top half of ratings tend to outperform those in the lower half by a factor of 2 to 1.

To stay updated with these important market metrics and others, make sure to check back regularly for the latest insights on Visa and the industry.

Visa, Market, Earnings