{"id":59042,"date":"2023-10-25T06:00:41","date_gmt":"2023-10-25T10:00:41","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59042"},"modified":"2023-10-25T17:47:08","modified_gmt":"2023-10-25T21:47:08","slug":"visa-inc-v-q4-earnings-assessment-tracking-the-financial-services-titans-trajectory","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/10\/visa-inc-v-q4-earnings-assessment-tracking-the-financial-services-titans-trajectory\/","title":{"rendered":"Visa Inc. (V) Q4 Earnings Assessment: Tracking the Financial Services Titan's Trajectory"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Financial services giant<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_V\"> <span style=\"font-weight: 400;\">Visa Inc. (V)<\/span><\/a><span style=\"font-weight: 400;\"> beat revenue and earnings forecasts in its last reported quarter, propelled by a sustained resurgence in international travel post-pandemic. The results, announced following market closure on October 24, 2023, illustrate a persistent global inclination towards \u201c<\/span><a href=\"https:\/\/usa.visa.com\/pay-with-visa\/contactless-payments\/contactless-payments.html\"><span style=\"font-weight: 400;\">Tap to Pay<\/span><\/a><span style=\"font-weight: 400;\">\u201d transactions in in-store locations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Despite escalating interest rates, a measure implemented by the Fed as part of its strategy to curtail inflation, American<\/span><a href=\"https:\/\/www.axios.com\/2023\/10\/17\/consumer-spending-americans-2023-inflation-economy\"> <span style=\"font-weight: 400;\">consumer spending<\/span><\/a><span style=\"font-weight: 400;\"> has shown a striking tenacity. A surge in consumer expenditure prompted substantial growth in sectors like travel and retail, benefitting<\/span><a href=\"https:\/\/www.insiderintelligence.com\/content\/credit-card-spend-remains-strong-q3-delinquencies-show-no-sign-of-easing\"> <span style=\"font-weight: 400;\">credit card<\/span><\/a><span style=\"font-weight: 400;\"> companies like V.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Federal Reserve Bank of New York discloses that American credit card balances have reached an<\/span><a href=\"https:\/\/abcnews.go.com\/US\/generation-sees-biggest-increase-credit-card-debt-gen\/story?id=102326452\"> <span style=\"font-weight: 400;\">unprecedented pinnacle of $1 trillion<\/span><\/a><span style=\"font-weight: 400;\"> this year. In the second quarter of 2023 alone,<\/span><a href=\"https:\/\/www.newyorkfed.org\/medialibrary\/interactives\/householdcredit\/data\/pdf\/HHDC_2023Q2\"> <span style=\"font-weight: 400;\">credit card balances<\/span><\/a><span style=\"font-weight: 400;\"> experienced a rise of $45 billion, marking a 4% increase year-over-year. According to Statista, around<\/span><a href=\"https:\/\/www.statista.com\/statistics\/261327\/number-of-per-card-credit-card-transactions-worldwide-by-brand-as-of-2011\/\"> <span style=\"font-weight: 400;\">242 billion global purchase transactions<\/span><\/a><span style=\"font-weight: 400;\"> involved V payment cards during 2022, an average of nearly 0.66 billion transactions daily.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">V's growth can also be attributed to the persistent shift towards digital payments, along with an extension of the company's service offerings \u2013 factors which are believed to have significantly boosted the fiscal fourth quarter performance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For the fiscal fourth quarter (ended September 30, 2023), V\u2019s net revenues soared 10.6% year-over-year to $8.61 billion, propelled by the burgeoning growth in payments volume, cross-border volume, and processed transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With<\/span><a href=\"https:\/\/s1.q4cdn.com\/050606653\/files\/doc_financials\/2023\/q4\/Q4FY23-Visa-Operational-Performance-Data.pdf\"> <span style=\"font-weight: 400;\">$3.20 trillion in payment volumes<\/span><\/a><span style=\"font-weight: 400;\">, V cemented its position as the unquestionable pacesetter in the payment realm. The company registered a 9% annual surge in payment volume while processed transactions touched 55.96 billion, seeing a 10% increase for both the fourth quarter and the full fiscal year. Excluding intra-European transactions, cross-border volume swelled 18% in the fourth quarter and an impressive 25% across the fiscal year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Credit volumes reported an 8% growth, hitting $1.6 trillion during the fiscal fourth quarter, matching the debit volumes that rose by 9%. The company operates with over 8.5 billion endpoints, 3 billion cards, 3 billion accounts and 2.5 billion digital wallets in circulation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Throughout the year, durable consumer spending patterns persisted, supplemented by the ongoing recovery of cross-border travel spending in comparison to 2019 levels, which resulted in sturdy growth across V's new flows and value-added services sectors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">V\u2019s non-GAAP net income for the company reached $4.82 billion, and earnings per share stood at 2.33, signaling an uptick of 17.7% and 20%, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s now direct our attention to other factors that may steer the course of the company's stock performance in the future:<\/span><\/p>\n<p><b>Robust Growth<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Over the past three and five years, V\u2019s revenue grew at 11.6% and 9.7% CAGRs, respectively. Its EBITDA for the same periods grew at CAGRs of 12.1% and 10.2%, respectively. The company\u2019s levered FCF grew at 10.3% and 9.9% CAGRs over the past three and five years, respectively.<\/span><\/p>\n<p><b>Growing Institutional Ownership<\/b><\/p>\n<p><span style=\"font-weight: 400;\">V\u2019s robust financial health and fundamental solidity make it an appealing investment opportunity for institutional investors. Notably, several institutions have <\/span><span style=\"font-weight: 400;\">recently modified<\/span><span style=\"font-weight: 400;\"> their V stock holdings.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Institutions hold roughly<\/span><a href=\"https:\/\/www.nasdaq.com\/market-activity\/stocks\/V\/institutional-holdings\"> <span style=\"font-weight: 400;\">95.2% of V shares<\/span><\/a><span style=\"font-weight: 400;\">. Of the 3,575 institutional holders, 1,577 have increased their positions in the stock. Moreover, 164 institutions have taken new positions (4,442,807 shares).<\/span><\/p>\n<p><b>Optimistic Analyst Estimates<\/b><\/p>\n<p><span style=\"font-weight: 400;\">For the quarter ending December 2023, its revenue and EPS are expected to surge 10% and 9.3% year-over-year to $8.73 billion and $2.38, respectively. The company has surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.<\/span><\/p>\n<p><b>Price Performance<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The stock has gained over 12% year-to-date and about 23% over the past year. Moreover, V\u2019s stock is trading above its 200-day moving average of $231.39, indicating an uptrend.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, Wall Street analysts expect the stock to reach $279.38 in the next 12 months, indicating a potential<\/span><a href=\"https:\/\/www.tipranks.com\/stocks\/V\/forecast\"> <span style=\"font-weight: 400;\">upside of 19.1%<\/span><\/a><span style=\"font-weight: 400;\">. The price target ranges from a low of $240 to a high of $310.<\/span><\/p>\n<p><b>Bottom Line<\/b><\/p>\n<p><span style=\"font-weight: 400;\">As a leading player in the payment processing industry, the V's services are employed every time an individual uses a V-branded credit card. This translates into millions of daily transactions \u2013 each contributing to the company's revenue.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company has exhibited robust fiscal health and margins that make its business model highly enticing to investors. With its payment network firmly established, V can keep operational costs at bay, resulting in significant profits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The strength and profitability of V's business elucidate its ability to increase its dividend payments consistently. Recently, V\u2019s board of directors announced a 16% increase in its quarterly cash dividend to $0.520 per share of Class A common stock, payable to shareholders on December 1, 2023.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">V <\/span><span style=\"font-weight: 400;\">pays a $1.80 per share dividend annually, which translates to a 0.78% yield on the current share price. Its four-year average dividend yield is 0.65%. The company\u2019s dividend payouts have grown at a CAGR of 14.5% over the past three years and 16.9% over the past five years. The company <\/span><span style=\"font-weight: 400;\">boasts of a consistent record of dividend distribution for 14 consecutive years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, in October, V\u2019s board of directors authorized a new $25 billion multi-year class A common stock share repurchase program.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Given V\u2019s robust profitability, optimistic analyst estimates, attractive returns to shareholders, and solid growth over the past years, it could be a wise portfolio addition now.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Financial services giant Visa Inc. (V) beat revenue and earnings forecasts in its last reported quarter, propelled by a sustained resurgence in international travel post-pandemic. The results, announced following market closure on October 24, 2023, illustrate a persistent global inclination towards \u201cTap to Pay\u201d transactions in in-store locations. Despite escalating interest rates, a measure implemented [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":58719,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32908,32909,32907,6190,32912,32910,32682,32911,32906,32140],"class_list":["post-59042","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-3-20-trillion-in-payment-volumes","tag-242-billion-global-purchase-transactions","tag-95-2-of-v-shares","tag-consumer-spending","tag-credit-card","tag-credit-card-balances","tag-tap-to-pay","tag-unprecedented-pinnacle-of-1-trillion","tag-upside-of-19-1","tag-visa-inc-v"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Visa Inc. 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