Stock (Symbol)

Visa (V)

Stock Price

$101

Sector

Financial

Data is as of

August 8, 2017

Expected to Report

Oct 23

Company Description

Visa Inc. is a payments technology company. The Company is engaged in operating a processing network, VisaNet, which facilitates authorization, clearing and settlement of payment transactions across the world. The Company provides its services to consumers, businesses, financial institutions and governments in more than 200 countries and territories for electronic payments. Source: Thomson Financial

Sharek’s Take

In this qtr a year ago, Visa (V) acquired Visa Europe, took Costco’s credit card business from AMEX, and took USAA’s business from MasterCard. These new deals pushed profit growth beyond expectations, as growth averaged 26% the last 4 qtrs. Looking ahead, profits are expected to climb an average of 13% the next 4 qtrs, but I feel 20% growth is realistic as V has been beating the street. Looking ahead, International and e-commerce is where the growth opportunity lies for Visa, with cross-border growth being in the double-digit range the past four qtrs. The global opportunity to digitize cash and check is enormous — Visa CEO in an earnings call 3qtrs ago. V is a very safe stock that’s delivered more than 20% profit growth on average since it went public in 2008. It’s what I consider a core holding for both growth and conservative investors. For the 2nd straight qtr management spent $400 million on dividends and $1.7 billion buying back its own stock. Visa ends its fiscal year September 30th, thus I’m looking ahead to 2018 to calculate my P/E, which is now just 25. With an Est. LTG of 17% plus a 1% yield, I feel the P/E will get back to 29 during the next year, and my Fair Value is $116 a share. This stock has been flying high, and with the P/E so low I think it can continue to climb the rest of the year.

One Year Chart

Last qtr V had sales growth of 26% and profit growth of 25%, the latter which beat analysts estimates of 18%. Estimates are for 9%, 15%, 13% and 16% profit growth the next 4 qtrs, but my guess is V will continue deliver 20% growth. Annual profit estimates have increased the last 3 qtrs, but not by much. The Est. LTG of 17% is exceptional for a safe stock such as this.

Fair Value

V currently sells for 30x 2017 earnings estimates. My Fair Value is 29x earnings, and I’m looking ahead to 2018 thus my Fair Value is $116. 2019’s Fair Value is $135 which if attained with be a good gain for a safe stock such as this.

Bottom Line

Next qtr Visa will close out its best year since 2013. 2018 looks to be a slower growth year, but with the stock having just a 25 P/E I envision further gains ahead. This stock has a lot to offer including high safety, an Est. LTG of 17% a year, a 1% yield and a growing market in electronic payments. Management also buys back stock in addition to acquisitions. V ranks 25th in the Growth Portfolio Power Rankings and 5th in the Conservative Portfolio Power Rankings.