However, payment processors are holding up as consumers increasingly turn to credit cards for purchases. Visa Inc. was founded in 1958 by Bank of America as the BankAmericard Credit Card network. Not only is the card itself of historical importance, but how it was launched is also.
Its investments in technology are further boosting its already leading position in the payments market. This helps the company to minimize the impact of fraud, and protect consumer and merchant information. This is of huge importance as digital payment methods are rapidly gaining popularity.
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. As always, the devil is in the details, so investors will surely want to know what is in it and the impact it could have on Visa. Actually, in the most recent quarter, cross-border volume crossed above where it had been in 2019. Transactions processed was $45.3 billion, up 21% over the prior year and up 24% over 2019. Online sales had their best month this year, up 1.9%, while furniture stores, up 1.4%, electronics/appliance stores, up 1.1%, and clothing retailers, up 0.6%, were among the best performers.
Bottom-up investing may not be foolproof, but it provides a thorough understanding of a company’s potential and risks — and that’s a powerful starting point for any investment decision. Payment volume was up 12% year over year in the quarter, while cross-border volume was up 40% and processed transactions climbed 16%. Cross-border volume surpassed pre-pandemic 2019 levels, CEO Al Kelly said. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
The credit card company posted strong earnings, but other news brought it down.
So, let’s see what this old financial firm’s been up to lately. Some other top-ranked stocks in the broader Business Services space are Shift4 Payments, Inc. While Shift4 Payments currently sports a Zacks Rank #1 (Strong Buy), FirstCash and Paysafe carry a Zacks Rank #2 each.
- Payments volume was $2.8 trillion for the quarter; that was up 19%.
- Spending at gas stations and at building material stores was down, but core retail sales, which excludes those two, as well as automobiles and food services, was up 0.6% in the month.
- The results topped FactSet forecasts of $2.11 in earnings per share on $8.06 billion in revenue.
- Our estimates for service revenues and data processing revenues indicate an 11.5% and 10.2% increase from a year ago, respectively, which will likely support its top-line growth.
One way to find stocks is from the top down, focusing on macroeconomic factors like sector and industry trends, economic conditions, and economic indicators. On the other hand, bottom-up investing begins at the company level, researching and analyzing the specifics of its business before zooming out and looking at the bigger picture. Also, in a big news day, the Federal Reserve Board concluded its two-day meeting on Wednesday and announced another 75-basis-point interest rate hike to the 2.25% to 2.50% range. The stock market rallied on the announcement, which helped boost Visa back up at the closing bell, ending down only about 0.95% for the day.
Benzinga’s Top Ratings Upgrades, Downgrades For October 12, 2023
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 global cloud team: solution for your business recent rally and the potential weakness from a recession-driven by the Covid outbreak. Our dashboard What Factors Drove 89% Change in Visa Stock between 2017 and now?
The company is making bold moves into the areas of cybersecurity and tech-powered, cross-border payments. Moreover, Visa is prepared to invest in the future of gen-AI technology. Consumers and travelers are eager to put Covid in the rearview mirror, but inflation is eating into disposable income and recession fears loom. And e-commerce sales, which peaked during the pandemic, are normalizing too. On March 29, Visa said it would become the first major payments network to settle transactions in USD coin, a stablecoin backed by the U.S. dollar, over ethereum. Visa’s stock is owned by many different institutional and retail investors.
Visa Inc. Cl A stock rises Tuesday, outperforms market
Entities needing financial payment processing infrastructure can enroll in VisaNet and issue Visa-branded cards and services to their clients and customers. Then just to add a little bit more context on there, each month Visa reports the spending momentum and has a number of the Spending Momentum Index and that has been falling. This tracks consumer spending and it was up in July and then up-selling August fell again in September. That could be a headwind for the company coming into the first quarter of fiscal 2022.
With physical products, a company incurs additional costs for each item it sells. Visa’s main competitive advantage is its reach, which only gets amplified with time, thanks to the network effect. A company vantage fx with a competitive advantage — especially one that’s unlikely to change in the foreseeable future — is a stable and promising investment. Dave Kovaleski has no position in any of the stocks mentioned.
It offers debit cards, credit cards, prepaid products, commercial payment solutions, and global automated teller machines (ATMs). The company was founded by Dee Hock in 1958 powertrend and is headquartered in San Francisco, CA. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
Sens. Dick Durbin and Roger Marshall were preparing a bill that would allow merchants to process Visa and Mastercard cards over other networks as a way to increase competition and keep down fees. Visa rose in early trading on the strength of its report for the quarter ended June 30, where it beat both earnings and revenue estimates. The company generated $7.3 billion in revenue, a 19% year-over-year increase and more than the $7.1 billion estimated by analysts.
However, claims that merchants have had difficulty routing transactions through competing networks has led to what are believed to be higher network fees. Additionally, the probe is looking at financial incentives that Visa provides to banks issuing cards on its network. Whether such incentives encourage routing of transactions on Visa’s network as opposed to its competitors remains to be seen. The top three US credit card issuers, namely American Express (AXP), JPMorgan (JPM), and Citigroup (C), have similarly reported a normalizing delinquency and charge-off trends, nearing the hyper-pandemic levels. 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.
Our dashboard “What Factors Drove 49% Change In Visa Stock Between 2018-End And Now? Visa’s revenues of $21.8 billion in 2020 were 5% below the 2019 figure. 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.
Viewed in that light, it’s no wonder investors are disappointed today. Visa’s revenue beat represented 29% year-over-year growth from last year’s Q4 revenue, and GAAP profits surged 68% year over year. Visa’s P/E multiple changed from around 37x in FY 2017 to 32x at the end of FY 2019. While the company’s P/E is just below 37x now, there is a downside risk when the current P/E is compared to levels seen in the past years – P/E of around 34x at the end of FY 2018 and close to 32x at the end of FY 2019. On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Thus, with powerful partnerships and tech-friendly ventures, Visa is more cutting-edge than you might expect. In light of this, I encourage you to consider a long position in V stock today. We’re already seeing evidence that Visa is leveraging the power of next-generation technology. Yet, the best may be yet to come as Visa is jumping headfirst into the generative AI revolution with a multimillion-dollar investment. Speaking of more secure transactions, Visa recently entered into a strategic partnership with Expel to help clients manage their cybersecurity risk. The payment processing group ranks No. 123 out of 197 industry groups tracked by IBD.
In addition, V’s dividend investment thesis is excellent, attributed to its expanded +16.8% dividend growth rate over the past five years, compared to the sector median at +7.09%. Based on the consensus FY2026 adj EPS estimates of $12.58 and its FWD P/E of 27.32x, we are still looking at a long-term price target of $343.68, implying an impressive upside potential of +45.8% from current levels. Meanwhile, Visa stopped issuing co-branded cards with Binance in Europe in July, Bloomberg reported in late August. The two companies partnered to issue debit cards in January 2021.