Visatopped Wall Street's earnings estimates by a penny Wednesday, but the company's shares fell because of regulatory concerns and its failure to outperform Wall Street estimates as much as investors had come to expect.
"It was maybe not the blowout quarter some investors were expecting," said Signal Hill analyst Mayank Tandon. "I think it's understandable that we're seeing some profit-taking, given that the results were good but not great."
Visa's shares fell in late trading, after initially edging higher in the extended session. Get after-hour quotes for Visa here.
The stock finished Wednesday's New York Stock Exchange session just slightly lower at $79.92.
The company also authorized a $1 billion share repurchase and said it expected net revenue to grow 11 percent to 15 percent in its coming fiscal 2011 year.
Chief Executive Joseph Saunders said in an statement that Visa plans to continue investing to expand its business, despite a "very challenging business environment."
Visa's efforts to reassure investors about its long-term outlook did not completely quiet fears about increased regulatory scrutiny.
Visa and rivalMasterCarddo not lend at all and were relatively insulated from the massive credit losses affecting banks during the financial crisis. But now they are facing increasing U.S. regulatory scrutiny over their processing businesses.
The new U.S. Dodd-Frank financial reform law will restrict the processing fees that Visa and rival MasterCard earn from debit card transactions. This month, both companies also settled a Justice Department antitrust lawsuit over their processing rules.
"There's been so much fear that has been built into Visa and MasterCard in general ... I think the concerns over Visa and the industry were overblown by investors," said Jim Tierney, the chief investment officer of W.P. Stewart, which owns shares of both networks.
The world's largest credit and debit card processing network reported adjusted earnings of $695 million, or 95 cents a share in its fiscal fourth quarter, up from 74 cents a share in the same quarter last year. Analysts' profit estimates for Visa compare with the adjusted earnings figure.
Sales for the most recent period rose to $2.12 billion, up from $1.879 billion a year ago.
The average performance expected by equity analysts who follow Visa was a profit of 94 cents a share and revenue of $2.094 billion, according to Thomson Reuters.
Visa's adjusted profit excluded the revaluation of the company's Visa Europe franchise. On an unadjusted basis, earnings grew 51 percent $774 million.
With 1.83 billion credit and debit cards bearing the Visa logo worldwide, including 686 million in the U.S., the company provides a unique lens for watching consumer spending, which makes up the bulk of the U.S. economy.
The company, which processes transactions done with credit and debit cards bearing the Visa name, makes money every time someone buys something with one of the cards. Its revenues have grown this year as U.S. consumers have become more willing to spend again.
- AP and Reuters contributed to this report.