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Visa Inc (V) Beats Estimates, Yelp Inc (YELP) Disappoints

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Visa Inc (NYSE:V) announced its earnings for the last three months of 2012 on Wednesday, February 6, after the market closed. The company posted earnings of $1.82 per share for the period, on revenues of $2.85 billion. In anticipation of the release of this report, the market sent the company’ shares up by a fraction.

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In the same period of 2011, Visa Inc (NYSE:V) revealed earnings of $1.49 per share. Revenue for the last three months of 2011 came in at $2.5 billion. The last three months of each year is the first quarter on the Visa fiscal calendar, making this report the first quarter of 2013 for the firm.

Analysts had expected the credit card giant to report earnings of $1.79 for the quarter ending in December, on revenues of $2.81 billion. The credit card giant’s good performance in recent years has caused many analysts to become increasingly bullish on its future.

A Wells Fargo & Company (NYSE:WFC) report studying the company was released this morning. The report, which was authored by Timothy Willi, put a higher than consensus EPS forecast of $1.84 on the firm’s first quarter, with a revenue forecast of $2.84 billion. The analyst’s bullishness stems from a large expected increase in online activity, and possible outperformance in international markets.

Visa Inc (NYSE:V) arch rival Mastercard Inc (NYSE:MA) announced a doubling of its dividend this morning. The second biggest credit card firm in the United States said its strong financial performance had justified an increase in its dividend returning some of its value to shareholders. The company increased its dividend to 60 cents per share. It was less than a year since the company last approved of the dividend it pays to its shareholders.

Visa stock has increased by more than 5% since the start of 2013, and by more than 50% in the last twelve months. The company is trading at a P/E ratio of over 85, implying that investors predict earnings growth will increase by a wide margin in the coming years.

Both credit card giants are performing incredibly well as the world moves to become a less cash heavy society, and developing economies begin to get in on the action. Analysts expect the company’s growth in earnings to continue. Earnings per share for the full year of 2012 came in at $6.20. Analysts are expecting the company to post earnings of $7.26 per share in 2013, and earnings per share of $8.43 billion in 2014, by consensus.


Yelp Inc (NYSE:YELP) posted a loss per share of 8 cent safter the market closed this afternoon on revenues of $41.2 million. Analysts were expecting the firm to post a 4 cents loss per share on revenue of  $40.2 million. Some analysts are worried that the firm’s business is being sapped by Facebook competition.

As investors waited for this earnings report, they sent the value of shares in Yelp Inc (NYSE:YELP) up by more than 4% in Wednesday’s normal trading.

The online review website has not earned anything for its investors in two years, and there is little sign of the company being able to make a solid profit for some time to come. Yelp is a prime example of a company that is well known but has not yet managed to monetize its brand, or its user numbers.

Despite the lack of earnings, and the low revenue, the company is valued at around $1.4 billion. The company has made a loss in too many consecutive quarters to count, but the magnitude of those losses does appear to be getting less severe. In the same quarter of 2011, the company managed to lose 15 cents per share on total revenue of $24 million.

Yelp Inc (NYSE:YELP) will have to answer questions about its ability to monetize its mobile offerings going forward. The company is currently growing due to a large boost in traffic, but as that traffic moves increasingly to mobile devices, the company may find itself having a more difficult time boosting revenue.

Yelp Inc (NYSE:YELP) investors have had a hard time adjusting to the company’s reality since it went public in March of 2012. The company’s shares have fallen by more than 10% since the IPO date. In anticipation of this earnings report, however, in the opening weeks of 2013, the firm’s shares have increased by more than 17%.

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