Is Visa Stock A Buy, Sell Or Hold After Recent Earnings? NYSE:V

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Together, these companies account for 2.3% of the Technology Select Sector SPDR ETF (XLK). That would be a great way to end 2023 and I’m grateful that this blue chip still looks cheap after the market’s recent rally. I have a bit of cash that I’d like to put to work in the markets before the month is over. It’s not burning a hole in my pocket because of the market’s recent macro rally. The Dow Jones Industrial index just crossed up above the 37,000 threshold for the first time, hitting new all-time highs.

Although Visa’s Q4 results were higher than the consensus estimates for earnings and revenues, its net revenues of $5.1 billion were 17% less than the previous year. This could be attributed to a 38% drop in international transaction revenues followed by a 13% drop in services revenues. The payments giant derives around 27% of its revenues from the international transactions segment, which has suffered the most due to lockdown restrictions and travel bans. Despite the recent improvement, the transaction volumes are likely to take some time to recover to the pre-Covid levels, limiting Visa’s scope of revenue growth. In addition, Visa’s P/E multiple changed from around 37x in 2017 to close to 32x in 2019.

  1. The following illustration is a good example of how a payment transaction works.
  2. Note that fees will be less important for debit transactions (VS credit) and more important for cross-border transactions (VS domestic).
  3. The only cost Visa incurs per additional transaction is aggregated under its ‘Network and processing’ expenses.
  4. Finally, Visa’s processed transactions – the total number of transactions processed by the business — surged 17% higher year over year.
  5. Acquiring banks are responsible for ensuring that their merchants comply with the rules.

The facts discussed here and much other information on might help determine whether or not it’s worthwhile paying attention to the market buzz about Visa. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term. Visa is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Payment-processing stock Visa (V -0.03%) put investors on notice in late-October when it declared a 17.2% increase in its quarterly dividend from $0.32 to $0.375 per share. Let’s take a look at a few reasons why Visa’s board of directors were comfortable enough to authorize a huge dividend increase, forex technical analysis as well as whether the stock is a buy at its current valuation. Visa has 100 million merchant locations and more than 4 billion outstanding cards all plugged into its payments platform. Because there are so many customers using Visa cards, merchants have no choice but to accept them.

Caution: Thinking about the valuation

Compared to the Zacks Consensus Estimate of $8.5 billion, the reported revenues represent a surprise of +1.52%. Visa V has been one of the most searched-for stocks on lately. So, you might want to look at some of the facts that could shape the stock’s performance in the near term. Click here for a two-week free trial so we can help you achieve better long-term total returns and your financial dreams. I want to see if any other attractive opportunities arise (Visa is already a top-10 position for me, so I wouldn’t mind adding funds to other high conviction bets with lower weightings).

Visa Debit

Comparing Visa to the S&P 500 and the Dow Jones Industrial Average, Visa outperforms them both by over 1,000%. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.

Visa and Mastercard Are Under Attack. They Will Do Just Fine.

For the fiscal second quarter, Visa expects net revenue to grow at an “upper-mid” to high-single-digit rate. The company also expects earnings per share to grow at a “high-teens” pace from a year before. The company saw a 16% boost in volume from cross-border transactions, which take place when someone makes a purchase from a merchant based in a different country. Cross-border volume typically is seen as a proxy for international travel, though it also encompasses international e-commerce purchases. This article explains how you can buy Visa stock and informs you of important details you should know before investing in Visa.

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PayPal, for reference, was able to grow its revenue by just 8% during the most recent quarter, and it had to lower its earnings per share guidance by a massive 20% relative to the consensus estimate for this year’s profits. It seems to be pretty clear that PayPal and other fintech companies are now feeling a pandemic hangover similar to what Netflix (NFLX) has been experiencing. The macro environment has changed, and with the pandemic coming to an end, tailwinds such as people staying at home and shopping/consuming there are no longer driving extraordinarily high business growth for PYPL and others. Instead, Visa benefits from more spending in the real world, as consumers are traveling more, spending more at brick-and-mortar retailers, dining out more, and so on. That’s because the stock’s operating results showed considerable momentum at the end of last fiscal year heading into this fiscal year. For instance, Visa’s payments volumes, total cross-border volumes, and processed transactions were all higher in its fiscal fourth quarter than they were for the full-year.

While the company’s P/E is just below 48x now, this leaves some scope for downside when the current P/E is compared to levels seen in the past years – P/E multiple of around 41x at the end of 2020. Our dashboard “What Factors Drove 56% Change In Visa Stock Between 2018-End And Now? The payments giant is very sensitive to changes in consumer spending levels. The consumer spending levels suffered in 2020 due to the impact of the Covid-19 crisis and the economic slowdown.

This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings. Historically, Visa has traded at a premium to its peers because of a strong brand, zero leverage, higher growth, and strong operating margins. When your stock price rises at such a rapid rate, it’s difficult to maintain a high yield (remember, dividend yields maintain an inverse relationship to stock prices). Management notes that this means that Visa’s credentials were used more than 757 million times per day in fiscal 2023.

I find my EBITDA projection very conservative, as just last quarter we saw a higher margin when adjusting for non-recurring legal and Russia-related expenses. In 2013, Visa launched Visa Checkout, an online payment system that removes the need to share card details with retailers. The Visa Checkout service allows users to enter all their personal details and card information, then use a single username and password to make purchases from online retailers. Visa has a set of rules that govern the participation of financial institutions in its payment system.

That said, the spending levels have seen some recovery over the last six months of 2020, and are expected to further improve over the subsequent quarters, with improvement in the economy. This is likely to benefit the growth rate of data processing and services revenues. Further, its international transaction revenues were down last year due to the impact of the Covid-19 related travel restrictions, which are still there in most of the countries.


I recently wrote an article about Mastercard (MA), explaining why I think both payment giants are great businesses, with plenty of room for upside. I also explained that if I want to stay true to my strategy, I have to pick only one between them, as I’m looking for a concentrated portfolio. I listed in detail the reasons I picked Visa and why I find it more attractive at current prices, so I urge you to read the full comparison.

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