Visa Inc Stock Fair Value – Visa: Margins And Growth Strong, Value Not So Much
December 29, 2023
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Visa Inc ($NYSE:V). is a leading global payments technology company that enables consumers, businesses, financial institutions, and governments to use electronic payments to securely access and move money. Visa’s stock has recently been on an impressive run, with growth and margins that are strong.
However, many investors are questioning whether the stock is fully valued, given its sky-high expectations. Visa’s revenues have grown steadily over the past few years, with double-digit year-over-year growth in each of the past two quarters. These margins are largely driven by the company’s network scale and pricing power, which are both significant drivers of its profitability. However, despite these impressive growth figures and margins, many are questioning whether the stock is fairly valued. The company’s price to earnings ratio is now at an all-time high, and many analysts feel that the stock could be overvalued given its lofty expectations.
Additionally, some investors feel that the company faces significant competitive threats from other payment companies such as PayPal and Apple Pay. As a result, while Visa has seen strong growth and robust margins, investors may not see great value in the stock at its current price.
Stock Price
On Thursday, VISA INC stock opened at $258.5 and closed at $260.4, showing a slight 0.6% increase from the previous closing price of 258.9. This hike can largely be attributed to the company’s strong margins and growth prospects, as Visa has seen a steady increase in its profits during the past few quarters. Despite these positives, many investors are still skeptical when it comes to evaluating the true value of the company’s stock. With increasing competition from other payment networks such as MasterCard and American Express, many feel that the stock may have already reached its peak and could be due for a correction. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Visa Inc. More…
| Total Revenues | Net Income | Net Margin |
| 32.65k | 17.27k | 53.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Visa Inc. More…
| Operations | Investing | Financing |
| 20.75k | -2.01k | -17.77k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Visa Inc. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 90.5k | 51.77k | 18.72 |
Key Ratios Snapshot
Some of the financial key ratios for Visa Inc are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 14.3% | 15.9% | 66.4% |
| FCF Margin | ROE | ROA |
| 60.3% | 34.9% | 15.0% |
Analysis – Visa Inc Stock Fair Value
GoodWhale has conducted an analysis of VISA INC‘s financials and, using our proprietary Valuation Line, have determined that the fair value of a VISA INC share is around $269.4. Currently, VISA INC is traded at $260.4- a price that is undervalued by 3.4%. In other words, investors might be able to benefit from buying now if the stock returns to its fair value. More…
Peers
In the world of electronic payments, there are four major players: Visa Inc, Mastercard Inc, PayPal Holdings Inc, and American Express Co. All four of these companies are in constant competition with one another to gain market share. While Visa and Mastercard are the traditional giants in the industry, PayPal and American Express have been making inroads in recent years.
– Mastercard Inc ($NYSE:MA)
Mastercard Inc is a technology company that connects consumers, financial institutions, merchants, governments and businesses around the world, enabling them to use secure and convenient electronic transactions. As of 2022, Mastercard Inc has a market cap of 287.75B and a ROE of 110.3%. The company operates in two segments: Global Payment Solutions and Data & Services.
– PayPal Holdings Inc ($NASDAQ:PYPL)
Founded in 1998, PayPal Holdings, Inc. is a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. PayPal has over 300 million active customers and handles over $232 billion in total payment volume on an annual basis. The company operates as a payment processor for online vendors, auction sites, and other commercial users, for which it charges a fee. In addition, PayPal offers a credit product called “Bill Me Later,” which allows customers to finance their online purchases.
– American Express Co ($NYSE:AXP)
American Express Co is a multinational financial services corporation with a market cap of 107.94B as of 2022. The company is headquartered in Three World Financial Center in New York City. American Express Co is best known for its credit card, charge card, and traveler’s cheque businesses.
Summary
Visa is a well-established payments technology company with strong growth and solid margins. Despite a recent pullback in its stock price, it is still a very attractive investment opportunity. The company’s financials remain sound and its earnings have been consistently increasing over the last few years.
The stock is currently trading at a PE ratio lower than its peers, signaling a potential bargain. Although the near-term outlook for the stock is uncertain, Visa appears to offer good value for investors looking to capitalize on its long-term growth prospects.
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