Visa Inc. (NYSE: V)
Quality Value Investing Research Report | $V Updated Coverage | September 2024
When referencing this report, premium (paying) subscribers can access the Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets and Research Report Format Guide. Unless noted, all data presented is sourced from Charles Schwab & Co. as of the market close on September 17, 2024, and intended for illustration only.
In this updated coverage research report, we’ll reexamine the QVI Real-Time Stock Picks financials sector holding, Visa Inc. V 0.00%↑ to see if it continues to meet Quality Value Investing’s criteria based on our checklist analysis of the business’s current wealth and the share price’s present value.
Visa Inc. | Current Wealth
Value Proposition
Visa is a dividend-paying large-cap stock in the financials sector’s transaction & payment processing services industry. It was added to the QVI Real-Time Stock Picks on October 12, 2022, at a $175.44 cost basis per share, adjusted for dividends.
Visa Inc. operates as a payment technology company in the United States and internationally. The company was founded in 1958 and is headquartered in San Francisco, California USA.
Economic Moat
Morningstar assigns Visa a wide moat rating based on its view of the company’s full-circle network effect, where plugged-in consumers make payment networks more appealing to merchants, thus making the network more convenient for consumers.
QVI’s Value Proposition Elevator Pitch for V:
Visa is a household name in global electronic payment processing, where half its revenues drop to the bottom line. Now, that’s a dynamic business model, if not highway robbery
QVI’s value proposition rating for Visa: Bullish.
Returns on Management
Revenue Growth and Net Profit Margin
Per the table below, Visa’s trailing three-year annualized revenue growth was double-digit positive, still underperforming the S&P 500 topline growth of 18.6%. In contrast, the company’s revenue growth of 9.70% beat the broader market’s 4.6% for the most recently reported twelve months.
Further down the income statement, Visa had a super-double-digit positive net profit margin from an 80.20% gross margin, quintupling the S&P 500’s net of 10.70% from a gross of 40.90%.
Returns on Equity and Invested Capital
Visa’s senior management produced a high double-digit return on equity, or ROE, above QVI’s targeted threshold and the S&P 500’s ROE of 17.40%.
Stock buyback programs often elevate ROE. For example, during the quarter ending on June 30, 2024, the company repurchased $5.52 billion of its outstanding shares. The board of directors had announced a cumulative $25 billion buyback program in January.
Visa’s return on invested capital, or ROIC, outperformed QVI’s threshold and the broader market’s 22.40% return. Moreover, the company’s ROIC exceeded its weighted average cost of capital, or WACC, demonstrating that its senior executives are outstanding capital allocators. (Source of WACC: GuruFocus)
QVI’s business fundamentals rating for Visa: Bullish.
Next, we’ll look at the company’s enterprise downsize risks, the stock price’s present value, share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
Disclosure: As of the date of this research report, I/we had no beneficial position in V common shares in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in independent research or due diligence and consider, as appropriate, consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.
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