Key Stats for Visa Inc
It's odd that Visa's not regarded as a Financial Services business but an Industrial company! But maybe that's how it justified 25x earnings versus boring old banks and insurance companies!
| Ticker | V |
|---|---|
| Sector | Business Support Services |
| Latest price | $82.21 |
| Value | $191,295M |
| Daily vol | $670M |
| Date | 09 January 2017 |
Useful Links
- Latest news from Google Finance and Yahoo Finance
- Latest results from SEC Edgar
- Website: https://usa.visa.com/
Description
Almost silly of me to give a description eh? Still
- Visa is a payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners and government entities to electronic payments.
- The Company's transaction processing network facilitates authorization, clearing and settlement of payment transactions and enables to provide its financial institution and merchant clients a range of products, platforms and value-added services.
- The Company is a retail electronic payment network based on payments volume, number of transactions and number of cards in circulation.
- Its products/services include core products, processing infrastructure, transaction processing services, digital products, merchant products, and risk products and payment security initiatives.
It's an oligopoly with Mastercard in Europe and the Americas and has started to penetrate other markets like Japan where there are local leaders, though the Chinese market looks like it is still closed to them. :(
Recent financials
Oddly, it's got a Sept year end, and note that Visa Inc bought Visa Europe in June 2016, so we should see a nice jump in the figures in the coming year, as the European data gets included.
| Metric | 2016A | 2015A | 2014A | 2013A | 2012A |
|---|---|---|---|---|---|
| Revenue | $15bn | $14bn | $13bn | $12bn | $10bn |
| EPS | $2.48 | $2.58 | $2.16 | $1.90 | $0.79 |
For example the forecast for the year to Sept 2017 is $18bn of sales v $15bn last year.
Competition
When it comes to competition, there is cash, cheque, direct bank transfers, and then a range of alternative to Visa. But if we look at the math... no one comes close.
| Visa | MasterCard | Amex | JCD | Discover/ Diners | |
|---|---|---|---|---|---|
| Volume | $9,905bn | $4,564bn | $1,040bn | $207bn | $154bn |
| Cards | 3,009m | 1,574m | 118m | 94m | 58m |
It's hard to see where the threat is, as money gets increasingly digitized across the globe. And please don't say "Bitcoin" ;).
So with twice the cards and volume, it's no surprise that Visa is 2x Mastercard on sales. Plus it's scale affords it best margins in the industry. Though only MA and DFS are direct comparisons. Amex, PYPL, etc aren't exact matches, even if they compete tangentially with V.
| Companies | Latest Sales | Operating Profit | Return on Equity |
|---|---|---|---|
| Visa Inc | $15,082M | 68% | 21% |
| American Express Company | $33,076M | 27% | 25% |
| Discover Financial Services | $8,419M | 55% | 21% |
| Mastercard Inc | $10,537M | 56% | 64% |
| Paypal Holdings Inc | $10,417M | 21% | 10% |
| Alliance Data Systems Corporation | $7,059M | 28% | 30% |
| Fiserv Inc | $5,442M | 30% | 33% |
| Global Payments Inc | $3,089M | 21% | 15% |
Cash / Debt?
Visa Inc has $12,661M of net debt. That is 1.2x it's latest operating profit. So nothing to get fussed about.
Wall Street thinks?
The professionals on Wall Street have a $94.25 for Visa Inc and their recommendation to clients is Buy. That implies an upside of 15% to their target.
Valuation
Okay, it's the giant, it bought out the EU unit, and got the scale the others haven't. But does $V and $MA for that matter, deserve the valuation of a tech giant? Is its outlook as rosy as Paypal's? It appears the market thinks so.
| View Peers | Valuation | Forecast PE | Long-term Growth | Dividend Yield | FCF Yield |
|---|---|---|---|---|---|
| V | $191,295M | 25x | 16% | 1% | 3% |
| AXP | $69,074M | 13x | 7% | 2% | 5% |
| DFS | $28,420M | 13x | 8% | 2% | 10% |
| MA | $117,417M | 29x | 15% | 1% | 4% |
| PYPL.O | $50,015M | 28x | 17% | 0% | 4% |
| ADS | $13,650M | 14x | 12% | 0% | 8% |
| FISV.O | $23,839M | 25x | 13% | 0% | 4% |
| GPN | $11,443M | 21x | 23% | 0% | 5% |
If fact the thing I don't get is why $AXP and $DFS are only on 13x earnings. Is there growth so lackluster? Anyone?
Dividends
Visa Inc is forecast to pay a dividend of $0.66 per share, compared a forecast EPS of $3.28. So plenty of room there for the recently authorized $5bn re-purchase program!
Catalysts
In the last 3 months the stock price has moved by -1% that compares with a change in the earnings forecasts of 18%. So the valuation's come in as we rolled forward a fiscal year from 29x to 25x.
On the management team's latest call with Wall Street brokers they gave a rosy outlook
We feel good about fiscal year 2017. The Visa Europe integration is proceeding well and delivering as expected. Payment volume momentum remains robust globally. Transactions growth remains healthy. Cross-border volumes are recovering as the dollar stabilizes and comparisons become easier. Gas prices and exchange rate drags are easing.
So, steady as she goes! Looks like $V is a Quality stock, even if it's not cheap. So a boring but good stock anyone?
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Disclosure: I have no position in any of the stocks mentioned. However I may initiate a position within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
Author notes: u/shane_stockflare works at a financial website, Stockflare, and is a Chartered Financial Analyst.
Submitted January 09, 2017 at 04:59PM by shane_stockflare http://ift.tt/2jmFo37
