Market Inference Overview — Visa Stock

Visa logged a -0.5% change during today's morning session, and is now trading at a price of $223.17 per share. The S&P 500 index moved -0.6% and the Nasdaq posted a -0.3% change. V's trading volume is 1,015,315 compared to the stock's average volume of 7,037,685. Let's dive right into a brief fundamental analysis of Visa.

Visa shares moved 11.0% over the last 52 weeks, with a high of $250.58 and a low of $174.6. During this time, the stock outperformed the S&P 500 index by 18.7%. As of January 2022, the company's 50-day average price is $212.0. Visa Inc. operates as a payments technology company worldwide. The large-cap Financial Services company has 26,500 full time employees and is based in San Francisco, CA. Visa has returned a 0.7% dividend yield over the last 12 months.

The Company Has a Steady Stream of Positive Cash Flows with an Upwards Trend:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $22,977 $21,846 $24,105 $29,310
Revenue Growth n/a -4.92% 10.34% 21.59%
Operating Margins 67.0% 64.5% 65.6% 67.2%
Operating Margins Growth n/a -3.73% 1.71% 2.44%
Net Margins 52.57% 49.74% 51.07% 51.03%
Net Margins Growth n/a -5.38% 2.67% -0.08%
Earnings Per Share $5.32 $4.89 $5.63 $7.0
EPS Growth n/a -8.08% 15.13% 24.33%
Free Cash Flow (MM) $12,028 $9,704 $14,522 $17,879
FCF Growth n/a -19.32% 49.65% 23.12%
Capital Expenditures (MM) -$756 -$736 -$705 -$970
Net Debt / EBITDA 0.55 0.52 0.27 0.33

Visa Is Reasonably Priced:

Compared to the Financial Services sector's average of 13.34, Visa has a trailing twelve month P/E ratio of 31.9 and, according to its EPS guidance of 9.6, an expected P/E ratio of 23.2. Visa's PEG ratio is 1.88 based on its 17.0% annual average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued.

Visa's P/B ratio is 13.9 compared to its sector average of 1.95. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 391.0% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 5.71 * 16.078) = $45.45

Visa's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.

Visa Is the Subject of Mixed Market Indicators:

37 analysts are following Visa and have set target prices ranging from $185 to $290 per share. On average, they have given the company a rating of buy. At the current price of $223.17, V is trading -12.4% away from its average analyst target price of $254.76 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 1.9% of the company's shares are tied to short positions. Institutions own 98.7% of Visa's shares, while the insider ownership rate stands at 0.14%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $32,396,544,790.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.