Is Visa Stock a Buy Ahead of Q2 Earnings? Key Predictions to Consider

Visa Inc. V is set to report its second-quarter fiscal 2025 results on April 29, 2025, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.68 per share on revenues of $9.56 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)The estimate for fiscal second-quarter earnings has been revised upward by 1 cent over the past 60 days. The bottom-line projection indicates a year-over-year increase of 6.8%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 9%. Image Source: Zacks Investment ResearchFor fiscal 2025, the Zacks Consensus Estimate for Visa’s revenues is pegged at $39.6 billion, implying a rise of 10.2% year over year. The consensus mark for EPS is pegged at $11.30, predicting a jump of around 12.4% on a year-over-year basis.The payments juggernaut has a robust history of surpassing earnings estimates. It beat estimates in each of the last four quarters, with the average being 3%???. This is depicted in the graph below:Visa Inc. Price and EPS Surprise Visa Inc. price-eps-surprise | Visa Inc. QuoteQ2 Earnings Whispers for VisaOur proven model predicts a likely earnings beat for Visa this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s precisely the case here.Visa has an Earnings ESP of +0.10% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Shaping Visa’s Q2 ResultsThe Zacks Consensus Estimate suggests a 5.5% increase in total Gross Dollar Volume from the previous year, while our model predicts 5% growth. The growing adoption and popularity of digital payment methods are likely to contribute positively to Visa's overall fiscal second quarter results.As the company draws revenues as a set percentage of total transaction value every time a customer makes payments with a debit/credit card, higher spending means more revenues in the form of transaction processing fees. The Zacks Consensus Estimate for fiscal second-quarter total processed transactions indicates 10.1% year-over-year growth, whereas our model predicts a 9.5% increase.The consensus mark for total payment volumes indicates a 7.4% year-over-year increase. We expect the metric for U.S. operations alone to jump 6% year over year. Similarly, our model predicts 6.3% and 14.4% year-over-year growth in Latin America and CEMEA, respectively.The Zacks Consensus Estimate for data processing revenues indicates 9.2% growth in the fiscal second quarter from the year-ago level of $4.3 billion, while our estimate suggests a 9.9% increase. Similarly, the consensus mark for service revenues suggests 9.1% year-over-year growth, whereas we expect the metric to grow by 9.5%.Furthermore, the consensus estimate for international transaction revenues indicates 12.7% growth from a year ago, whereas our model predicts a 10.8% increase. Continuous growth in cross-border volumes is expected to have supported the metric.The factors stated above are expected to have positioned Visa for strong year-over-year growth and an earnings beat in the fiscal second quarter. However, rising expenses and client incentives (a contra-revenue item) are likely to have partially offset the positive impact of higher volumes.We expect adjusted total operating expenses for the quarter under review to increase more than 10% year over year due to increased Personnel, Marketing, Professional Fees and Network and Processing expenses. Also, both the Zacks Consensus Estimate and our model estimate for client incentives suggest that the metric will be around $3.8 billion in the fiscal second quarter.Visa Price Performance & ValuationVisa's stock has declined 2.5% in the past month. However, it outperformed the industry and the S&P 500’s fall of 4.1% and 5.9%, respectively. In comparison, its peers like Mastercard Incorporated MA and American Express Company AXP have declined 2.5% and 3.2%, respectively, during this time.Price Performance – V, MA, AXP, Industry & S&P 500 Image Source: Zacks Investment ResearchNow, let’s look at the value Visa offers investors at current levels.The company’s valuation looks somewhat stretched compared with the industry average. Currently, Visa is trading at 27.73X forward 12-months earnings, above its five-year median of 26.92X and the industry’s average of 22.52X. Image Source: Zacks Investment ResearchIn comparison, Mastercard is even less attractively valued, trading at 31.97X forward 12-months earnings. American Express, on the other hand, is trading at 16.76X, offering a better value at the moment.How Should You Play Visa Ahead of Q2 Earnings?Visa stands out in a volatile macroeconomic environment due to its low-risk, transaction-based business model, which shields it from direct credit risk and allows it to benefit modestly from inflation-driven price increases. The company continues to capitalize on the global shift from cash to digital payments, delivering steady growth in earnings and revenue. Its ongoing investments in real-time payments, B2B solutions and blockchain, along with solid shareholder returns, through dividends and buybacks, position it as a long-term winner. Visa's strong balance sheet and market dominance further reinforce its appeal, especially compared to risk-exposed peers like American Express.However, Visa, along with its peer Mastercard, faces growing regulatory risks, including lawsuits, fee scrutiny and potential competition from proposed piece oflegislation like the Credit Card Competition Act. With V shares trading comparatively close to their 52-week high and above historical valuation averages, its short-term upside appears limited. While the stock remains a compelling hold for existing investors due to its resilient fundamentals and long-term growth story, new investors may want to wait for a more favorable entry point and keep an eye on legal uncertainties and the upcoming earnings results.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. 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