Stock Analysis

Here's Why Visa (NYSE:V) Has Caught The Eye Of Investors

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NYSE:V
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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Visa (NYSE:V). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Visa

How Fast Is Visa Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Visa managed to grow EPS by 9.7% per year, over three years. That's a pretty good rate, if the company can sustain it.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The music to the ears of Visa shareholders is that EBIT margins have grown from 65% to 67% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

earnings-and-revenue-history
NYSE:V Earnings and Revenue History September 24th 2022

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Visa's future profits.

Are Visa Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$381b company like Visa. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Notably, they have an enviable stake in the company, worth US$190m. While that is a lot of skin in the game, we note this holding only totals to 0.05% of the business, which is a result of the company being so large. This should still be a great incentive for management to maximise shareholder value.

Should You Add Visa To Your Watchlist?

One important encouraging feature of Visa is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination definitely favoured by investors so consider keeping the company on a watchlist. Of course, just because Visa is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Although Visa certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

What are the risks and opportunities for Visa?

Visa Inc. operates as a payments technology company worldwide.

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Rewards

  • Trading at 6.6% below our estimate of its fair value

  • Earnings are forecast to grow 10.51% per year

  • Earnings grew by 21.8% over the past year

Risks

  • Significant insider selling over the past 3 months

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Share Price

Market Cap

1Y Return

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About NYSE:V

Visa

Visa Inc. operates as a payments technology company worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth3
Past Performance6
Financial Health5
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Outstanding track record with excellent balance sheet and pays a dividend.