Quick Update for Visa (V) Investors

Today we're going to take a closer look at large-cap Consumer Discretionary company Visa, whose shares are currently trading at $275.96. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Trades Below Its Graham Number but Has an Elevated P/B Ratio:

Visa Inc. operates as a payment technology company in the United States and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Visa has a trailing 12 month P/E ratio of 31.8 and a P/B ratio of 14.53.

Visa's PEG ratio is 2.09, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Strong Revenue Growth With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $20,609 $22,977 $21,846 $24,105 $29,310 $32,653
Revenue Growth n/a 11.49% -4.92% 10.34% 21.59% 11.41%
Operating Margins 63% 65% 64% 66% 64% 64%
Net Margins 50% 53% 50% 51% 51% 53%
Net Income (MM) $10,301 $12,080 $10,866 $12,311 $14,957 $17,273
Net Interest Expense (MM) -$612 -$533 -$516 -$513 -$538 -$644
Earnings Per Share $4.42 $5.32 $4.89 $5.63 $7.0 $8.28
EPS Growth n/a 20.36% -8.08% 15.13% 24.33% 18.29%
Diluted Shares (MM) 2,329 2,272 2,223 2,188 2,136 2,085
Free Cash Flow (MM) $12,223 $12,028 $9,704 $14,522 $17,879 $19,696
Capital Expenditures (MM) $718 $756 $736 $705 $970 $1,059
Current Ratio 1.5 1.27 2.12 1.4 1.44 1.45
Total Debt (MM) $16,633 $16,729 $24,054 $21,919 $22,450 $20,463

Visa benefits from rapidly growing revenues and increasing reinvestment in the business, generally positive cash flows, and healthy debt levels. The company's financial statements show strong operating margins with a stable trend and a strong EPS growth trend. Furthermore, Visa has just enough current assets to cover current liabilities, as shown by its current ratio of 1.45.

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.