They reported earnings yesterday after the market closed. If you check the stock price today it’s down about 7%, so something went wrong. So for Q4, revenue came in at $6.6 billion and that was up 29%. Same thing on the bottom line, earnings per share of $1.65, up 70%.

  • The company’s growing network is expected to boost volumes.
  • Like cars travel the roads to get from one destination to another, money travels on payment networks.
  • The data centers are hardened against internal and external attacks, both physical and digital, and can operate independently of each, providing ample redundancy for the system.

Granted, too, card payments volume may not grow at a 1-to-1 relationship with revenue. Also noteworthy is Visa’s revelation that “cross-border volume” — international purchases — indicates a big revival in international travel. Such Visa payments outside of Europe were at 151% of 2019 levels in May 2023. These purchases tied specifically to travel were up 139%.

The rise of cashless payments directly fueled Visa’s strong growth. The business grew annual revenue from $12 billion to nearly $32 billion over the past decade. Additionally, Visa’s network has grown faster than the cost of its upkeep, so the company’s free cash flow is growing at a fast clip too, rising from $8 billion to nearly $19 billion. Service fee revenue rose 15% to $3.66 billion, topping expectations of $3.63 billion. Data processing fees also rose 15%, to $4.1 billion, beating FactSet estimates of a 10.8% gain.

Investors are worried: Is Visa growing fast enough?

To find other best stocks to buy or watch, check out IBD Stock Lists and other IBD research. Upgrade to MarketBeat All Access to add more stocks to your watchlist. Sign-up to receive the latest news and ratings for Visa and its competitors with MarketBeat’s FREE daily newsletter. MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation. That bill, according to the Journal, could be introduced in the Senate as early as this week, so that is something to keep an eye on.

Despite the recent improvement, the transaction volumes are likely to take some time to recover to the pre-Covid levels, limiting Visa’s scope of revenue growth. In addition, Visa’s P/E multiple changed from around 37x in 2017 to close to 32x in 2019. The company’s current P/E is 40x, which suggests a potential downside risk for the stock. Our dashboard What Factors Drove 106% Change In Visa Stock Between 2017 And Now? The payments giant is very sensitive to changes in consumer spending levels.

Visa Inc. is a US-based multinational financial services company formed from a consortium of US banks. It is the 2nd largest payment processor globally and the leading payment processor outside China. Its market share in 2021 was roughly 50% of global transaction volume x-China. Transactions are processed in 1 of 4 hardened data centers in key regions worldwide. The data centers are hardened against internal and external attacks, both physical and digital, and can operate independently of each, providing ample redundancy for the system. As of 2022, the company can process more than 30,000 transactions per second, making it the most viable solution for most use-case scenarios.

Visa declared a quarterly dividend on Tuesday, July 25th. Stockholders of record on Friday, August 11th will be paid a dividend of $0.45 per share on Friday, September 1st. This represents a $1.80 dividend on an annualized basis and a dividend yield of 0.76%. The ex-dividend date of this dividend is Thursday, August 10th. Visa operated as four separate entities serving different regions of the globe until restructuring in 2006. The restructuring resulted in the merger of 3 of the four assets into Visa Inc, leaving Visa Europe as a stand-alone entity.

U.S. payments volume grew 5% year over year in May, with credit card usage up 5% and debit 6%. “Card-not-present” transactions in particular, which generally refer to credit or what is price action debit card transactions done over the phone or over the internet, grew 7%. 17 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for Visa in the last year.

  • The stock was trading at approximately $241 per share at 3 p.m.
  • Same thing on the bottom line, earnings per share of $1.65, up 70%.
  • Visa has posted nine straight quarters of sales and earnings gains.
  • There are currently 1 sell rating, 3 hold ratings and 13 buy ratings for the stock.

They charge merchants fees (or tolls) for securely moving money back and forth between different places. The global economy has multiple payment networks, but Visa, Mastercard, American Express, Discover, and China’s UnionPay are the largest. Meanwhile, Visa and Mastercard face an antitrust lawsuit from Block (SQ). The parent company of Square sued the credit card giants on July 14, alleging the payment networks and their member banks charged inflated fees and used their market power to employ anticompetitive practices. Solid post-pandemic consumer spending and increases in cross-boarder payments from the travel rebound have been key drivers. Shares of financial powerhouse Visa (V 0.38%) slipped 1.8% in noonday trading ET on Wednesday, after releasing data on its transactions and payments volume in the U.S. yesterday.

Our dashboard “What Factors Drove 56% Change In Visa Stock Between 2018-End And Now? The company outperformed the consensus estimates of revenues and earnings in the recently released second-quarter FY2021 results. Visa reported net revenues of $5.7 billion which was 2% less than the previous year.

DAX Index: German Wholesale Prices, Central Banks, and the Middle East in Focus

Further, over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new Covid-19 cases in the U.S to buoy market expectations. Though market sentiment can be fickle, and evidence of a sustained uptick in new cases could spook investors once again. While the company has seen high revenue growth over recent years, its P/E multiple has decreased. We believe the stock is unlikely to see a significant upside after the recent rally and the potential weakness from a recession-driven by the Covid outbreak.

Visa Outlook

If the card is issued in a different country than which it’s used, that the cross-border transactions. So, getting more international travelers inside the United States could boost cross-border volume. All in all, relatively strong quarter, but mixed reaction paquete de optimización lineal de python or a negative reaction to the outlook for what’s ahead for Visa. Of particular importance here is the fact that if card payments volume grew only 5% in May, that’s well below analyst forecasts for 10.9% revenue growth for Visa in the quarter ending in June.

Despite Big Losses, Investors Flock to Long-Term Bond ETFs

The consumer spending levels suffered in 2020 due to the impact of the Covid-19 crisis and the economic slowdown. That said, the spending levels have seen some recovery over the last six months of 2020, and are expected to further improve over the subsequent quarters, with improvement in the economy. This is likely to benefit the growth rate of data processing and services revenues. Further, its international transaction revenues were down last year due to the impact of the Covid-19 related travel restrictions, which are still there in most of the countries.

With V being a global payment leader, it is also unsurprising that the stock continues to trade at a premium compared to the fintech sector medians, though lower than its 5Y means. However, investors need not fret, since the stock’s valuations have merely normalized to its pre-pandemic averages. The Zacks Consensus Estimate for FirstCash’s current-year earnings indicates a 6.7% year-over-year gain.

Why Visa Stock Dropped Today

The steady cross-border travel and data processing growth will continue to aid its performance. During the pandemic, this trend got even better for Visa, as consumers eschewed cash in favor of plastic — and indeed, were essentially forced to use credit and debit cards when quarantined and shopping from home. The problem is, this accelerated “cash-to-card conversion” pulled some of Visa’s expected future revenue growth into 2020 and 2021, with the result that there’s now less cash to convert to credit in the future. A company as deep-pocketed and entrenched in the economy as Visa should remain a stellar investment for the long term. Its payment network business model likely isn’t going anywhere anytime soon.

Despite payment cards being invented in 1950 and Visa’s founding in 1958, cash is still the payment method for one in five transactions worldwide. The migration to cashless payments probably still has years left. Consumer spending remained resilient trend trading during the quarter, driving growth in payments volume and processed transactions, CEO Ryan McInerney noted in the release. “Cross-border volume continued to be a tailwind, fueled by travel growth from the ongoing recovery and summer tourism.”

At $232, Is Visa Stock Still Attractive?

This could mainly be attributed to lower cross-border transaction volumes. Further, the company is very sensitive to changes in consumer spending levels, which suffered in 2020 due to the impact of the Covid-19 crisis and economic slowdown. That said, the consumer spending levels have seen some recovery over the recent quarters and are likely to further improve with recovery in the economy.