The ongoing geopolitical and macroeconomic headwinds have led to significant stock market volatility. Peace talks between Russia and Ukraine have shown no progress so far, driving global supply disruptions and rising energy and commodity prices. Moreover, inflation peaked at its highest level in four decades. In addition, the March jobs data suggested a tight labor market.
Last week’s U.S. government data revealed that the nation’s economy had contracted 1.4% in the last quarter. The first quarter GDP shrank in stark contrast to last year’s 5.7% economic growth. However, first-quarter corporate earnings have been impressive so far. According to FactSet, the number of S&P 500 companies beating EPS estimates is above the five-year average. Out of the 55% of S&P 500 companies that reported results for the first quarter as of April 29, 80% beat Street EPS estimates, higher than the five-year average of 77%.
Visa Inc. (V)
V is a global payments technology company that enables digital payments between customers, merchants, financial institutions, enterprises, strategic partners, and government agencies. It also administers VisaNet, a transaction processing network that allows for the authorization, clearing, and settlement of payment transactions. It has a market capitalization of $458.63 billion.
On March 10, 2022, V announced that it had completed the acquisition of the open banking platform, Tink, which enables financial institutions, fintech, and merchants to build financial products and services and move money through a single API. V’s Chief Product Officer Jack Forestell said, “The combination of Visa’s proven infrastructure and sustained investment in resilience, cybersecurity, and fraud prevention with Tink’s APIs, technology, and customer relationships will help accelerate the adoption of open banking around the world by providing a secure, reliable platform for innovation.”
V’s EPS for the second quarter ended March 31, 2022, came in at $1.79, beating the consensus estimate by 9.1%. Its net revenues increased 25.4% year-over-year to $7.18 billion. The company’s net income increased 20.5% year-over-year to $3.64 billion.
Analysts expect V’s EPS and revenue for fiscal 2022 to increase 20.8% and 18.9% year-over-year to $7.14 and $28.66 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 0.6% to close the last trading session at $213.13.
Meta Platforms, Inc. (FB)
FB focuses on building products that enable people to connect and share through mobile devices, personal computers, virtual reality headsets, and in-home devices. Its segments include Family of Apps and Facebook Reality Labs. It has a market capitalization of $542.53 billion.
On December 16, the town of Zeewolde approved FB’s plan to build the largest data center in the Netherlands. The data center will run on green energy and is expected to use 1.38 GWh of electricity. The facility will likely help FB serve Facebook, Instagram, and WhatsApp users across Europe.
For the fiscal first quarter ended March 31, 2022, FB’s EPS came in at $2.72, beating Wall Street’s estimate by 6.2%. FB’s total revenue increased 6.6% year-over-year to $27.91 billion. The company’s daily active users (DAUs) rose 4% year-over-year to $1.96 billion. Also, its net cash provided by operating activities increased 14.9% year-over-year to $14.07 billion.
For fiscal 2023, FB’s EPS and revenue are expected to increase 18.2% and 16.8% year-over-year to $14.25 and $149.66 billion, respectively. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past month, the stock has lost 12.7% to close the last trading session at $200.47.
Microsoft Corporation (MSFT)
MSFT develops and supports a range of software products, services, devices, and solutions. The company operates in the Productivity and Business Processes, Intelligent Cloud, and Personal Computing segments. It has a market capitalization of $2.07 trillion.
On January 18, 2022, MSFT announced that it would buy gaming giant Activision Blizzard, Inc. (ATVI) in an all-cash deal worth $68.70 billion. This deal would help MSFT realize its vision of building technologies to create a metaverse. The acquisition also makes MSFT the third largest gaming company in revenue.
MSFT’s EPS for the third quarter ended March 31, 2022, came in at $2.22, beating Wall Street’s estimate by 1.8%. Its total revenue increased 18.3% year-over-year to $49.36 billion. The company’s operating income increased 19.4% year-over-year to $20.36 billion. Also, its net income increased 8.2% year-over-year to $16.72 billion.
Analysts expect MSFT’s EPS and revenue for fiscal 2022 to increase 15.8% and 18.6% year-over-year to $9.32 and $199.32 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 9.9% to close the last trading session at $277.52.
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V shares were trading at $208.70 per share on Monday afternoon, down $4.43 (-2.08%). Year-to-date, V has declined -3.54%, versus a -13.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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