The Price to Book ratio or P/B is calculated as market capitalization divided by its book value. (Book value is defined as total assets minus liabilities, preferred stocks, and intangible assets.) In short, this is how much a company is worth. Investors use this metric to determine how a company’s stock price stacks up to its intrinsic value. This article explains how you can buy Visa stock and informs you of important details you should know before investing in Visa.
But there’s a reason that the market is willing to assign a higher multiple to Mastercard. Mastercard also generates more of its revenue from markets outside the U.S. Mastercard (MA -0.47%) and Visa (V 0.38%) are two giants of the financial services world and account for a huge portion of the card-based payments market. Read on for differing bull cases from two Motley Fool contributors.
In my opinion, the Visa stock is attractive for long-term investors who primarily focus on dividend growth. From my point of view, these factors make Visa an excellent investment for investors with a long-term horizon aiming to invest for their retirement. But Visa doesn’t lend money or approve borrowers for credit cards at all. It simply provides the communications network that connects a merchant’s bank with a consumer’s bank.
Visa has posted nine straight quarters of sales and earnings gains. Both companies have network strength, Mastercard with its international exposure and Visa with a heavier commercial exposure. Once your account is funded, type in V in the search bar, decide the amount you want to invest, specify the order type, and place your order for execution. Business plummeted during the height of pandemic restrictions, but the recovery is moving along. Revenue for the company’s fiscal third quarter, covering the period ended June 30, increased 27% from the same period in 2020, but 10% over pre-pandemic 2019 levels. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.
Visa Outlook
A recovery in cross-border volume is expected to be a key driver of Visa’s earnings growth in the quarters ahead. I analyze Visa, Inc. in this section of the article by evaluating the company’s recent quarterly financial results and highlighting three key areas where V is differentiated from Mastercard Incorporated. Considering this level of outperformance, it might be a pleasant surprise to learn that the stock trades at a trailing price-to-earnings ratio of 29.6. The first, referenced in this diy financial advisor: a simple solution to build your wealth article, is the loss of revenue from the drop in international transactions and the projected slow rate of recovery in the tourism and business travel industries in coming years. From 2019 through 2024, consumer, commercial credit, debit and prepaid cards are expected to generate $10.72 trillion in purchase volume, an increase of 35.7%. The company cited improvements in payment volume, cross-border volume, and processed transaction growth, versus the COVID stunted results from recent quarters.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, and Visa. However, 85% of global transactions still use cash as a form of payment. That provides Visa with a long growth runway as it relentlessly expands its operations across the globe.
Lately, Visa has been using strategic partnerships to enhance its value to both the customers and, in the long run, the company’s shareholders. First of all, Visa is collaborating with Swift to streamline international business-to-business (B2B) payments. However, if you’re looking for a company from the financial services sector with a lower P/E Ratio, you might want to take a look at American Express. With a P/E (FWD) Ratio of 16.25, American Express is currently available at a lower price. The stock of Visa has a beta of 0.92, which is below that of the broader stock markets (with a beta of 1). This shows that an investment in Visa could not only contribute to the long-term growth of your investment portfolio, but also to the reduction of its volatility.
- A ratio under 40% is generally considered to be good.But note; this ratio can vary widely from industry to industry.
- It’s impossible for a newcomer to create a huge network like this from scratch, as Visa is already so ingrained in the fabric of our society, and using its cards has become so convenient.
- Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
- At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
- However, Visa continues to pay dividends, and the dividend payout has been growing steadily over time.
And it makes sense why the issuing bank receives the largest fee share. A bank is marketing to find a customer, then approving them for credit, and then servicing that product. So a high-performing linear programming with gurobipy in python stock appears to be available at a discounted price. But before committing to buying shares, it’s probably best to research this company a bit more and ensure Visa stock is the bargain it seems.
How to Buy Visa Stock Now, Price Forecast and Dividend Guide
This is why it is important to look at other niches Visa is moving towards. Based on current acquisition plans of companies like Tink and CurrencyCloud, it seems Visa is trying to become an infrastructure provider for competing fintech providers. One of the best ways to invest in Visa shares is to create a stock trading account with international broker ZFX. On the 18th of March 2015, Visa performed a 4-for-1 stock split, meaning that if you had 2 Visa shares before the split, you’d get 8 more, giving you a total of 10.
Dividend Strength
Visa’s real-time push in payments technology has seen robust growth during the pandemic. 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. Solid post-pandemic consumer spending and increases in cross-boarder payments from the travel rebound have been key drivers. For me, the separation of CEO and chairman is enough to tilt the scales in favor of Mastercard, but each investor has to answer what’s most important to them.
Neither company sports much of a dividend, choosing to return capital through share buybacks instead. It trades at 33 times trailing 12-month earnings at the current price, which is slightly on the cheaper side of where it typically trades. However, its track record of revenue growth, earnings growth, and cash generation make its stock worth a premium. Visa has a robust share buyback program, and it repurchased 15.6 million shares in the 2023 first quarter alone at a total cost of $3.1 billion.
Rival Payment Stocks To Visa
“Cross-border volume continued to be a tailwind, fueled by travel growth from the ongoing recovery and summer tourism.” Macy’s and Target cautioned they’re seeing spending weakness an investment magnum opus as traffic and comparable sales declined in their latest earnings reports. The resumption of student loan payments and sustained higher interest rates will also pressure budgets.
Have Visa IncClass A’s shares ever split?
There is an overwhelming buy consensus for Visa stocks among Wall Street analysts. Indeed, most analysts only expect the Visa stock price to grow several per cent over the next twelve months, meaning there could be better opportunities out there. The PEG ratio provides a broader view than just the P/E ratio, as it gives more insight into Visa IncClass A’s future profitability.
It takes the consensus estimate for the current fiscal year (F1) divided by the EPS for the last completed fiscal year (F0) (actual if reported, the consensus if not). An interchange fee is essentially a percentage of the transaction value, plus a fixed fee per transaction. These include the type of card (credit, debit or prepaid), whether the card was present or not, what type of authentication used, where the issuing bank and acquiring bank are located, and other variables.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. An industry with a larger percentage of Zacks Rank #1’s and #2’s will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4’s and #5’s. “Summer travel across most regions picked up, with travel in and out of Asia seeing strong gains,” CFO Vasant Prabhu highlighted on the earnings call. He also mentioned that while travel outbound from the U.S. is well above pre-pandemic levels, there is a lot of room for recovery for inbound travel to this country. Zeal Capital Market (Seychelles) Limited is part of Zeal Group,
which does not accept or offer any products to Hong Kong residents or public.
Its vast network of users and merchants results in a competitive advantage that cannot be easily surmounted. The company has taken a number of steps to adopt the contactless system of payments, thereby assuring that it will not fall victim to the prevailing macrotrends. The company has a number of strategic partnerships with the likes of PayPal (PYPL) Conferma Pay, and Shopee (SE) designed to expand the firm’s reach. In the 90 days leading up to the last quarterly report, Visa signed deals with Yandex (YNDX), WIng (WING), PAYCO, Naranja X and Easypaisa to continue to expand its global reach..
For fiscal year 2020, Visa saw a larger percent of volume across commercial cards. That may insulate it slightly against a recession as consumer spending makes up 68% of U.S. gross domestic product. Because the pandemic was such an outlier, we can see Visa’s strength more clearly in its long-term growth. As of the latest quarter, Visa has grown revenue by a 9.5% compound annual growth rate (CAGR) over the past five years, and net income by an even better rate of 14.3%. I believe that the most convincing argument for why investors should own Visa shares is just how wide its economic moat is.