Visa shares were rising early on Thursday as strong transaction volume helped deliver a convincing earnings beat.

Visa said its quarterly profit rose to $763 million or $1.02 a share in its fiscal first quarter. That was up from 74 cents a share a year earlier and expectations of 91 cents a share. The company logged $1.96 billion on the top line, up from $1.74 billion a year earlier, as volume on Visa debit cards increased.

International transaction fees of $552 million exceeded forecasts as cross-border volumes recovered more than anticipated driving the revenue outperformance in the quarter, wrote William Blair analyst David Long.

Total processed transactions totaled 10.9 billion for the quarter, a 12% increase over the prior year. Meanwhile, Visa also increased its 2010 revenue growth from the lower end of its previous range 11% to 15% -- and upped its operating margin guidance slightly. Additionally, it maintained its guidance for 2010 and 2011 earnings-per-share growth of more than 20%.

The bottom line: We view such guidance as achievable and potentially conservative if volume trends improve at a faster pace than we anticipate, wrote Long, who increased his 2010 EPS estimate by 14 cents a share and his 2011 EPS estimate by 20 cents a share due to impressive volume trends and well managed expenses.

Yum! Brands Down

Yum! Brands shares were falling early on Thursday despite better-than-expected earnings as investors reacted to sluggish U.S. sales.

The fast-food chain operator reported adjusted earnings of 50 cents a share topping expectations of 48 cents a share. Revenue edged down 1% over the year prior to $3.37 billion but was still better than Wall Street s view of $3.34 billion. The earnings per share upside was primarily driven by lower-than-expected commodity costs, which more than offset a higher-than-expected tax rate, wrote Jeffries analyst Jeff Farmer.

Some investor angst though came as the company said U.S. sales fell 15%, and sales for international stores fell 2%. The company opened more than 500 new stores in China sending overall sales there up 17%, but same-store sales in the region were still down 3%.

Most investors are well aware of the fact that McDonald's, after posting negative same store sales in China for most of 2009, reported positive December same store sales, Farmer wrote. January will likely represent a negative same store sales blip for both YUM and MCD based on an unfavorable Chinese New Year calendar shift. But, he predicts Yum s China same-store sales are likely to have fallen in the fourth quarter and will trend positive coming out of the first quarter of 2010.

The bottom line: New promotional offers Taco Bell now has a five-layer burrito for 89 cents and a $5 box should help U.S. same store sales after a nightmare 4th quarter performance, writes Farmer. We expect YUM to call out improved recent first quarter same store sales trends for the U.S. businesses. As of early on Thursday, though, investors were less than convinced.