The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$10,394.40||$11,863.09||$13,408.50||$15,197.00||$16,867.00|
|Source||Analyst x9||Analyst x9||Analyst x2||Analyst x1||Analyst x1|
Discounted (@ 9.58%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $16,867 × (1 + 2.47%) ÷ (9.58% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
$204,661 = $50,772 + $153,889
Value = Total value / Shares Outstanding ($204,661 / 2,257)Discount to Share Price
Value per share:
Current discount (share price of $120.43): -32.8%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.58% = 2.47% + (0.944 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($271,799,109,433).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.944 = 0.911 (1 + (1- 40%) (6.12%))
Levered Beta used in calculation = 0.944
Mr. Alfred F. Kelly, Jr., also known as Al, has been the Chief Executive Officer of Visa Inc. since December 1, 2016. Mr. Kelly served as the Chairman, President and Chief Executive Officer of the 2014 NY/NJ Super Bowl Host Company from April 2011 to August 2014. Mr. Kelly served as the Chief Executive Officer and President at Intersection Co. since February 17, 2016. He served as the President and Head of Global Consumer Group at American Express Company from July 1, 2007 to April 10, 2010. He led many of American Express' key businesses, including the Consumer Card Services Group, OPEN from American Express, Consumer Travel, Global Travelers Cheques and Prepaid Services, Establishment Services, North America, U.S. Customer Service, Global Risk Management and Interactive Services worldwide. He served as Group President of Consumer for Small Business and Merchant Services for American Express Co. from October 2005 to July 1, 2007. He served as Group President of U.S. Consumer and Small Business Services for Travel Releated Services Company, Inc. since June 2000. He served as the President of Consumer Card Services Group, TRS since October 1998. He served as an Executive Vice President and General Manager for Consumer Marketing, TRS since February 1997. He served as the Head of Information Systems at the White House from 1985 to 1987, where he oversaw the information processing functions for several government agencies that comprise the Executive Office of the President. He also held management positions in strategic and financial planning at PepsiCo. He has an extensive global experience in consumer marketing, strategic planning and development, customer loyalty and information technology. He has been an Independent Director of MetLife, Inc. since June 2009 and an Independent Director of Visa Inc. since January 29, 2014. He has been a Director of Metropolitan Life Insurance Company since 2009. He served as a Director for Affinion Group Holdings, Inc. from February 24, 2011 to August 9, 2013. He served as a Director of The Hershey Company from August 11, 2005 to November 11, 2007. He served as Vice Chairman of the Wall Street Charity Golf Classic for 12 years. He served as a Director of Affinion Group, Inc. from February 24, 2011 to August 2013. He served as the Chairman, Board of Directors of School of the Holy Child. He serves as a Trustee of The New York and Presbyterian Hospital and Iona Preparatory School. He served as a Member of Boards of Trustees of St. Joseph's Seminary and College and New York Catholic Foundation. He serves on the Board of Trustees of Iona College, New Rochelle, NY. He serves on the Board of Directors of Concern Worldwide USA and the Carvel Children's Rehabilitation Center and serves as Member of Council on Foreign Relations. Mr. Kelly holds a Master of Business Administration and Bachelor of Arts in Liberal Arts (Summa Cum Laude) from Iona College.
Average tenure and age of the Visa management team in years:
Average tenure and age of the Visa board of directors in years:
Return on Equity = Net Profit ÷ Shareholders Equity ROE is assessed against cost of equity, which is measured using the Capital Asset Pricing Model (CAPM) – but let’s not dive into the details of that today. … Since Visa’s return covers its cost in excess of 12.39%, its use of equity capital is efficient and likely to be sustainable. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NYSE:V Last Perf Feb 13th 18 The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses.Simply Wall St - – Full article
Below, I've laid out key growth figures on how market analysts view Visa's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. … This growth seems to continue into the following year with rates arriving at double digit 69.48% compared to today’s earnings, and finally hitting $12,794.4M by 2021. … NYSE:V Future Profit Jan 29th 18 Even though it’s helpful to understand the rate of growth year by year relative to today’s value, it may be more valuable determining the rate at which the company is growing on average every year.Simply Wall St - – Full article
NYSE:V Future Profit Jan 22nd 18 Chicken Soup for the Soul Entertainment, Inc. … NasdaqGM:CSSE Future Profit Jan 22nd 18 Callon Petroleum Company (NYSE:CPE) Callon Petroleum Company Inc., an independent oil and natural gas company, acquires, explores for, develops, and produces oil and natural gas properties in the Permian Basin in West Texas. … NYSE:CPE Future Profit Jan 22nd 18 For more financially robust companies with high growth potential to enhance your portfolio, use our free platform to explore our interactive list of these stocks.Simply Wall St - – Full article
Below, I will run you through a simple sense check to build perspective on how Visa is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its it industry peers. … This means generally, Visa has been able to consistently grow its earnings over the last few years as well. … This means whatever uplift the industry is gaining from, Visa is able to amplify this to its advantage.What does this mean?Simply Wall St - – Full article
5-year cash flow estimate 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $10,097.00 $11,209.67 $12,507.50 $13,925.00 $15,632.50 Source Analyst x12 Analyst x9 Analyst x4 Analyst x2 Analyst x2 Present Value Discounted @ 9.24% $9,242.81 $9,393.26 $9,594.13 $9,777.83 $10,048.18 Present Value of 5-year Cash Flow (PVCF)= $48,056 After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = $15,633 × (1 + 2.5%) ÷ (9.2% – 2.5%) = $236,554 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $236,554 / ( 1 + 9.2%)5 = $152,051 The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is $200,107. … NYSE:V Intrinsic Value Jan 12th 18 The assumptions I'd like to point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.Simply Wall St - – Full article
A closer look at V's profit margin Attractive margins generally indicate a desirable ability to translate sales revenue in to earnings, and return for shareholders. … Margin Calculation for V Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 6.47 Billion ÷ 18.36 Billion = 35.23% Visa's margin has expanded in the past five years, with 12.18% in average net income growth surpassing 10.40% in average revenue growth, which suggests that the company has been able to convert a larger percentage of revenue into net income whilst grow their top line at the same time. … Using Visa's margin expectations as a way to understand projections for the future Based on future expectations, V's profit margin will expand further, with 9.39% in expected annual revenue growth and a forecasted 20.98% in annual net income growth.Simply Wall St - – Full article
Visa Inc (NYSE:V) saw its share price hover around a small range of $104.58 to $113.82 over the last few weeks. … In addition to this, it seems like Visa’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. … If you believe Visa should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable.Simply Wall St - – Full article
Companies such as Visa and Chicken Soup for the Soul Entertainment have a significantly positive future outlook on the basis of their profitability and returns. … NYSE:V Future Profit Dec 23rd 17 Chicken Soup for the Soul Entertainment, Inc. … Profit growth, coupled with top-line expansion, is a positive indication.Simply Wall St - – Full article
This tells us that Visa is overvalued compared to the US market average ratio of 19.55x , and overvalued based on current earnings compared to the it industry average of 24.01x. … NYSE:V PE PEG Gauge Dec 20th 17 After looking at V's value based on current earnings, we can see it seems overvalued relative to other companies in the industry. … So when we include the growth factor in our analysis Visa appears a bit overvalued , based on fundamental analysis.Simply Wall St - – Full article
Since Visa Inc (NYSE:V) released its earnings in September 2017, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 45.22% next year compared with the past 5-year average growth rate of 12.15%. … To understand the overall trajectory of V's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope. … NYSE:V Future Profit Dec 12th 17 By 2020, V's earnings should reach $12,215.8M, from current levels of $6,467.0M, resulting in an annual growth rate of 20.36%.Simply Wall St - – Full article
Visa Inc. operates as a payments technology company worldwide. The company facilitates commerce through the transfer of value and information among consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It operates VisaNet, a processing network that enables authorization, clearing, and settlement of payment transactions; and offers fraud protection for account holders and assured payment for merchants. The company also offers gateway services for merchants to accept, process, and reconcile payments; manage fraud; and safeguard payment security online, as well as processing services for participating issuers of visa debit, prepaid, and ATM payment products. In addition, it provides digital products, including Visa Checkout that offers consumers an expedited, and secure payment experience for online transactions; and Visa Direct, a push payment product platform, that allows businesses, governments, and consumers to use the Visa network to transfer funds from an originating account to another via a debit, prepaid, or credit card number, as well as Visa token service that replaces the card account numbers from the transaction with a token. Further the company offers corporate (travel) and purchasing card products, as well as value-added services. It provides its services under the Visa, Visa Electron, Interlink, V PAY, and PLUS brands. Visa Inc. was incorporated in 2007 and is headquartered in San Francisco, California.
PO Box 8999,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NYSE||V||Class A Common Stock||New York Stock Exchange||US||USD||19. Mar 2008|
|DB||3V64||Class A Common Stock||Deutsche Boerse AG||DE||EUR||19. Mar 2008|
|XTRA||3V64||Class A Common Stock||XETRA Trading Platform||DE||EUR||19. Mar 2008|
|LSE||0QZ0||Class A Common Stock||London Stock Exchange||GB||USD||19. Mar 2008|
|SWX||V||Class A Common Stock||SIX Swiss Exchange||CH||CHF||19. Mar 2008|
|SWX||V||Class A Common Stock||SIX Swiss Exchange||CH||CHF||19. Mar 2008|
|WBAG||VISA||Class A Common Stock||Wiener Boerse AG||AT||EUR||19. Mar 2008|
|SNSE||V||Class A Common Stock||Santiago Stock Exchange||CL||USD||19. Mar 2008|
|BMV||V *||Class A Common Stock||Bolsa Mexicana de Valores||MX||MXN||19. Mar 2008|
|BVL||V||Class A Common Stock||Bolsa de Valores de Lima||PE||USD||19. Mar 2008|
|BOVESPA||VISA34||BDR EACH REPR 1 COM SHS||Bolsa de Valores de Sao Paulo||BR||BRL||02. Feb 2012|
|Data Processing and Outsourced Services|
|Company Analysis updated:||2018/02/22|
|Last estimates confirmation:||2018/02/12|
|Last earnings update:||2017/12/31|
|Last annual earnings update:||2017/09/30|
All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.