Visa’s initial public offering took place on Wednesday the 19th of March 2008. The company listed on the New York Stock Exchange with the ticker symbol V. The company’s shares were sold at $44 each, raising $17.9 billion. While Visa is larger in terms of transactions, purchase volume, and cards in circulation, Visa and Mastercard have nearly identical global merchant acceptance footprints. Visa and Mastercard are the only network payment processors involved in all three areas of the payments market.
- The company topped consensus revenue estimates each time over this period.
- Visa and Mastercard do not issue cards directly to the public but rather through partner member financial institutions such as banks and credit unions.
- However, the latest threat to Visa is e-wallets and fintech companies like PayPal, Klarna and Affirm that offer online payment acquisition, point of sale payments using mobile apps and QR codes and buy-now-pay-later solutions.
- It simply provides the communications infrastructure that helps facilitate transactions.
- For the fiscal first quarter, Visa posted net income of $4.9 billion, or $2.39 a share, compared with net income of $4.2 billion, or $1.99 a share, in the year-prior period.
They estimate Visa will post a YOY decline in payments volume for Q3 FY 2020 of 10.6%, marking a significant shift in this metric. This metric’s slowing growth rate is reflected in the company’s decelerating profit and revenue growth. Same-day ACH (Direct debit transactions) allows both debit and credit transactions to be processed several times on a daily basis. Merchants could be interested in such solutions as it is far less costly than using cards. However, we do not think that customers will accept to share their bank account information with merchants, and using a card is more convenient and secure for consumers.
Should You Buy Visa Stock Hand Over Fist in 2024?
Of course, Visa’s gains have come on the backs of the rise of digital payments. The digitization of commerce and the ongoing decline in cash usage has propelled this business. And there’s no reason to believe this secular trend is going to weaken anytime soon, especially in developing economies. Mastercard has published very strong results that confirm the recovery in cross-border transactions. According to its CEO, cross-border travel is above 2019 levels for the first time since the pandemic began and ahead of Mastercard’s expectations.
This sustainable advantage has allowed it to produce impressive financial performance in the past. What’s more, because of the predictable nature of Visa’s growth (and its long-term growth prospects), I apply that multiple to forward earnings when arriving at my fair value target. Taking a WACC of 7.5%, I estimate Visa’s fair value at $563.4B or $274.0 per share, representing a 21.2% upside compared to its market value at the time of writing. This reflects a forward P/E of 33, in line with Visa’s 5-year average. And that’s historically proven to be the case because once people get used to, let’s say, a digital form of payment because they use Pix or RuPay in India, UPI in India, they get used to digital payments.
Visa Inc. called out resilient spending as it logged an earnings beat for the latest quarter, but its shares were still coming under pressure in Thursday’s after-market action. Visa dominates the card payment sector, and thus there is little room for growth. This is why it is important to look at other niches Visa is moving towards. Based on current acquisition plans of companies like Tink and CurrencyCloud, it seems Visa is trying to become an infrastructure provider for competing fintech providers. One of the best ways to invest in Visa shares is to create a stock trading account with international broker ZFX.
IPO and restructuring
Visa’s net revenue increased 10.3% year over year to $24.11 billion in FY ’21, which was driven by across-the-board increases in its business. For one, payments volumes — the dollar amount of transactions processed by the company — grew by 16% year over year during the fiscal year. Secondly, total cross-border volumes — or volumes where the issuing country is different from the merchant country — climbed 9% over the previous fiscal year.
Visa and Red Bull Formula One Teams Announce Global Partnership
Buying Visa shares looks like a smart move only if you’re comfortable with the valuation. If you’re not, perhaps it’s best to practice patience and wait for a better entry point. This affords the management team the ability to return capital to shareholders. Visa spent $12.1 billion swing trade indicators on share repurchases and $3.8 billion on dividends in fiscal 2023. Should investors buy this top financial stock hand over fist in 2024? Here are three reasons why this could be the smartest move you make this year, as well as one final factor to consider before making a decision.
However, revenue growth already has been slowing in recent quarters, to 10.0% growth YOY in Q1 FY 2020 and to 6.6% in Q2 FY 2020. Investors are looking for clear answers to this question when Visa reports earnings after market close on July 28 for Q3 FY 2020. For the quarter, analysts estimate Visa will report sizable year-over-year (YOY) declines in revenue, and EPS. On the one hand, a strong argument can be made that Visa deserves to trade at a higher valuation than the overall market. But on the other hand, investors should still be critical of the price they pay for a stock, even if it’s of high quality.
Is Visa stock at fair valuation?
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period. Visa reported revenues of $8.63 billion in the last reported quarter, representing a year-over-year change of +8.8%.
In the UK the law was changed in January 2018 to prevent retailers from adding a surcharge to a transaction as per ‘The Consumer Rights (Payment Surcharges) Regulations 2012’. For the fiscal year 2022, Visa reported earnings of US$14.96 billion, with an annual revenue of US$29.31 billion, an increase of 21.6% over the previous fiscal cycle. Visa (trading symbol V) commands a $497.5 billion market capitalization, while Mastercard (trading symbol MA) follows closely behind at $359.8 billion (market caps as of May 18, 2021). As neither company extends credit or issues cards through a banking division, both have a broad portfolio of co-branded offerings.
On top of Visa’s net revenue growth, the company was more profitable in FY 2021. Visa’s non-GAAP net margin expanded 2.4 percentage points year over year to 53.7% in FY 2021, which is what propelled the company’s non-GAAP EPS 17.3% higher to $5.91 for the full-year. While COVID vaccines only widely became available in the third quarter of its FY ’21, https://bigbostrade.com/ Visa recorded double-digit net revenue and non-GAAP earnings per share (EPS) growth compared to FY ’20. It isn’t exactly a well-kept secret that when a stock announces a massive dividend increase, investors tend to pay attention. After all, a dividend increase more often than not signals insiders are confident in the direction of their company.
The company’s stand-alone valuation gap has increased marginally due to the relatively low performances of its competitors. The company rewards its shareholders through dividend and share repurchases. In fiscal 2Q16, Visa declared a dividend of $0.14 per share in line with the previous quarter. The dividends paid translated into an annualized dividend yield of 0.78%. I believe that’s also the case with buying high quality dividend growth stocks that produce regular fundamental growth.
Data processing fees are typically very small, fixed fees, charged on a per-transaction basis, that cover the costs of providing transactional information communicated on the network. Some had been proclaiming major problems for Visa and its peers due to purported “disruption” by a wide range of fintech players. Visa remains the king in the payment technology space, benefits from real-world spending growth (dining out, travel, etc.) and is actually growing faster than PayPal and many other fintech “disruptors”. In the past decade, from fiscal 2013 through fiscal 2023 (ended Sept. 30, 2023), Visa’s revenue increased at a compound annual rate of 10.7%. What’s impressive is that this growth has been consistent, besides the single-digit decline in 2020 due to the pandemic. Visa shares currently trade at a price-to-earnings ratio of 32.8, a discount compared to the stock’s trailing five-year average.
Cross-border payment volume was up 24% year over year, faster growth than overall payments volume. “On the cross-border front, the travel recovery trend has been steady and generally in line with our expectations so far in fiscal year ’23,” said CFO Vasant Prabhu on the latest earnings call. Management also mentioned travel into Asia being stronger than pre-pandemic levels. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
The company saw an 8% boost in payments volume during the latest quarter, while processed transactions rose by 9%. An interchange fee is essentially a percentage of the transaction value, plus a fixed fee per transaction. These include the type of card (credit, debit or prepaid), whether the card was present or not, what type of authentication used, where the issuing bank and acquiring bank are located, and other variables.