Should You Buy Visa Ahead of Earnings?

Visa Inc (NYSE:V) is expected to report its first-quarter earnings of its new fiscal year on Jan. 30. The stock is heading into its earning at a 52-week high and whether it will be able to continue rallying will depend on how good of a quarter the company has to start the year.

Visa’s share price has risen by around 50% over the past 12 months and with shares trading at nearly 40 times their earnings, the stock has become bloated. Last quarter, its sales were up 13% from the prior year. And while that’s good growth for a company of Visa’s size, it’s a bit light given how high its valuation is.

One concern, heading into its next earnings, is that many retails have struggled this earnings season with many reporting underwhelming results.

That could lead to some dangerous foreshadowing for Visa because if there was less shopping during the quarter, that likely means there was less credit card spending as well. While there may be more shoppers buying online than from conventional retailers, it’s still not a very bullish indicator for a credit card issuer that is dependent on a lot of spending.

With the stock’s steep increase in value, now may not be the time to be buying shares of Visa. Investors may be better off waiting until after the company releases its quarterly earnings. A disappointing result could make shares of Visa much cheaper than they are today.

And a strong result could ensure the stock continues on this strong trajectory for a while.