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Home » Visa Stock: Fundamental Analysis

Visa Stock: Fundamental Analysis

Visa (V) boasts an excellent track record in terms of earnings and is making further moves in digital payment. Do you think Visa stock a good investment at this time?

Its Dow Jones stock dominates U.S. credit card networks based on transactions and the number of cards that are that are in circulation. There is ample room for it to expand its digital payment business as well as pursuing new ventures on fintech and cryptocurrency.

On December. 8th, 2021 Visa announced the Global Crypto Advisory Practice. It is a service offered by Visa Consulting & Analytics “designed for assist partners and clients to advance their own cryptocurrency journey,” Visa said in the statement.

In other places, as Visa, Mastercard (MA) and American Express (AXP) are trying to break into new markets PayPal (PYPL) made its debut into the Chinese market for digital payments through its GoPay purchase in the year 2000.

Both Mastercard stock as well as PayPal stock are listed on the IBD Long-Term Leaders list.

On 5 March 2022 Visa announced that it was discontinuing service in Russia due to sanctions over their invasion of Ukraine. Prior to that, Visa also pledged $2 million for humanitarian assistance.
Visa Stock: Fundamental Analysis

Visa and Mastercard along in conjunction with China’s UnionPay run the world’s largest digital payment systems. Mastercard and Visa accept card transactions, but they don’t offer credit cards.

Additionally, Visa and Mastercard have less risk of interest rate risk. Visa doesn’t earn revenues from nor is it related to fees or interest that cardholders pay. However, Visa derives revenue from customer services, data processing and cross-border transactions as well as value-added products, like licensing fees. The Visa network spans more than 200 countries and territories.

Over the last 3 years Visa has averaged 4 percent increase in EPS and 2% growth in sales as per the IBD Stock Checkup tool. For key earnings and sales indicators, Visa stock earns an EPC Rating of 91 out of 100, with an SMR Rating that is A. The EPS rating is a reflection of the company’s performance on fundamental earningsand the SMR Rating is a measure of sales growth as well as profit margins and returns on equity.
Visa Earnings

On the 27th of April, Visa posted strong Q2 earnings, despite a surge in travel. This sent the stock up 8% within the day.

Visa reported its second quarter FY 2022 profits that were $1.79 per share. This is a 30% increase over the previous year and surpassing the Zacks Consensus forecast by 8.5 percent. Revenue increased by 25% over the past year to $7.2 billion. It also beat estimates by five percent.

The quarterly results of Visa were boosted by a strong increase in transactions processed transactions and cross-border transactions which was partially offset by the increase in operating expenses.

Visa Stock Technical Analysis

The giant of payments has a buy-point of 252.77 due to a consolidation according to MarketSmith analysis of charts. Shares jumped up after earnings in Q2, breaking through their 50-day line. Visa’s relative strength line has been moving back up.

For the Visa Stock forecast 2025 head on over to Stock Forecast.

Shares are awarded the IBD Composite Rating of 89 points out of a maximum 99. It combines the most important technical and fundamental metrics into one score. An RS score of 64 is less than the 80-plus mark that investors who invest in stocks with the highest growth would like to see.

The C+ Accumulation/Distribution Rating reflects an equal amount of buying and selling by institutional investors in the past 13 weeks. Visa stock is extremely traded, with an average of 8 million shares being traded every day.

Half of all outstanding shares are held by mutual funds. 5,611 funds held Visa stock at the time March 2022, an increase from 5,550 as of December 2021.

Visa Eyes Cryptocurrencies, Fintech

On January. 13 Visa announced a brand new platform called Visa Acceptance Cloud (VAC). VAC is expanding the capabilities of its “Tap to Phone” payment solution, which allows nearly every device to be turned into a payment terminal that is connected to the cloud.

“Expanding to include more than phones. Visa Acceptance Cloud enables any POS device or other connected device to accept payments seamlessly and integrate a variety of services that can be added, such as buy now and pay later, as well as fraud management, rapid Seller Onboarding and advanced analytics on data,” the company said in an announcement.

On August. 23 Visa declared that it had acquired an CyperPunk NFT on August. 19 for about $150,000 in Ethereum. The art work is Visa’s very first foray into NFTs. A rare collection of CryptoPunks, which were among the first 1000 coins to be minted for more than $17 million at Christie’s auction in May.

On August. 16 Visa joined forces with PayNearby the largest branchless bank and digital payment network along with RBL Bank to launch SoftPoS and mPOS for its 1.5 million plus retail network.

While SoftPoS lets merchants accept contactless payment transactions using simple tap and pay system for smartphones that support NFC PayNearby’s 2-in-1 Micro ATM machine and MPOS allows the easy acceptance of credit and debit cards in the final mile.

On March 29 Visa announced that it would be the first major payment network to accept transactions in USD Coin, a stablecoin supported with the U.S. dollar, over Ethereum.

Visa is testing the possibility by partnering with as which is a Visa Partner and also one of the biggest cryptocurrency platforms. It is planning to extend the USDC settlement option to other partners later in the year.

In partnership with Anchorage one of the very first digital assets chartered by a federally-chartered institution, Visa has announced the pilot program that will allow to transfer USD coin to Visa to pay a part of its obligations to its Visa Card program.
Visa Partners With BlockFi

On July 6 Visa joined forces with financial technology company BlockFi to offer an interest-free 2-percent Bitcoin reward credit card available to U.S-based residents.

In the meantime, on the 24th of June, Visa said it’s buying Swedish fintech company Tink to the tune of $2.5 billion. Tink will attract over 250 million clients from more than 3,400 financial and banking institutions across Europe.

Visa is seeking to be a part of the rapidly growing open banking market in Europe. Open banking permits financial companies to access data and customers in other institutions, provided customers have consent.

Consumer-facing and financial startups as well as banks utilize Tink’s tools to build applications and other tools that enable customers to manage accounts from multiple institutions at one time.

Visa recently added a crypto lender Cred which uses Visa’s network for sending interest payments to customers who have bank accounts.

Visa Outlook

As more countries relax or eliminate Covid restrictions and travel speeds up across the globe, Visa payments volume, processed transactions, and trans-border volume are growing. The term is used to describe transactions between merchants and shoppers from different countries.

An earlier Mastercard survey revealed it was the first time in the outbreak, business flights booked have surpassed the levels of 2019, a crucial step to the recovery. A significant portion of travel is attributed to airlines, but business travel has been slower than growth in travel for consumers according to the report.

If the current trends in flight bookings remain at the current rate the estimated 1.5 billion more people worldwide will travel in 2022, when compared to last year’s numbers in a study conducted by the Mastercard Economics Institute.

However, one positive aspect in the midst of the pandemic is the constant shift to online worldwide sales.

“This helps us as Visa’s percentage of digital commerce, in which cash isn’t the option around three times more that the actual point of purchase” Visa said.

Digital payments, powered by the rise of 5G networks can be a lucrative growth area. Visa’s push to make payments real-time technology has seen rapid growth in the aftermath of the outbreak.

The announcement was made in June of 2021. Visa confirmed it would be working in 2021 with Facebook (FB) to offer WhatsApp payment services in Brazil. The messaging platform is used by 120 million people in Brazil, the biggest nation of South America.

Brazil’s central bank authorised payments through WhatsApp Chat in the month of July, 2021. It did this after temporarily suspending the recently launched service and directing Visa as well as Mastercard to stop such transactions. The central bank pointed to security and competitive risks in its decision.

Visa And Coronavirus

The effect of Omicron is turning out to be less than anticipated. Tourists have returned to their vacations which has led to an increase in spending on gas, airline tickets rental cars as well as hotel stays and restaurants. This is a good thing for Visa because its hardest-hit segment during the pandemic was transportation, fuel, restaurants and entertainment. This segment accounts for the third percent of the U.S. payments volume.

A majority of Europe is still accessible for U.S. tourists, although vaccinations are mandatory. However, overall travel isn’t likely to increase to levels until 2022 with a slow increase in Asia where there are more strict Covid regulations.

Therefore the possibility of a resurgence in global economic growth and consumer spending could be an enormous risk for Visa stock after the coronavirus triggered the shock of demand.

Visa is also seeking to take advantage of opportunities from the epidemic. One of the areas is contactless payments. Even countries where adoption of tap-topay was slow are increasing their adoption rates amid the epidemic.

Nearly 500 countries across the globe have embraced cashless, or tap-to pay fare payments powered by Visa as the process of progress of public transportation begins to recover.

However, Covid has also “permanently shortened the cash-to-card-conversion runway” for Visa, according to analyst Dan Dolev at Mizuho Group. In the past, this segment has been the most significant revenue source for Visa. It is responsible for around 45 percent of the revenue growth, Dolev says in a recent letter to customers.

Dolev says the growing popularity of account-to-account payment firms like Plaid, real-time payment options like FedNow and the buy-now-pay-later trend, among other decentralized-financing trends will chip away at Visa’s dominance in the payments market.

The result was that Dolev has downgraded Visa stocks to buy from neutral and reduced his price goal down to 220 instead of 255 on January. 7.

Pay Stocks of Rival to Visa

Highly rated companies within IBD’s payment processing department comprise Square (SQ) along with PayPal. Other established competitors of Visa comprise American Express and Discover.

Paysign (PAYS) is a young playerthat focuses on healthcare in addition to online recruitment. PagSeguro Digital (PAGS) and Qiwi (QIWI) are also names worth keeping an eye on. Brazilian company StoneCo (STNE) which is backed by Warren Buffett, is also one worth watching.

Legendary investor Buffett has a small stake in Visa stock as well as Mastercard stock. He also has a large stake on American Express stock.

The group that handles payments is at the bottom of the list. among 197 groups in the industry monitored by IBD. Visa stock ranks No. 8 in this category; American Express is No. 3. Mastercard is No. 2, and Square Stock is no. 11. PayPal stock is no. 21.

Is Visa Stock A Buy?

It is believed that the Dow Jones card giant has an overwhelming share of the rapidly growing market for digital payments. Visa’s earnings are recovering as the headwinds of coronavirus diminish.

Additionally, Visa is also a top payment stock within an industry group that’s doing well.

Sure, the competition in digital payment is fierce. Global economic, legal and regulatory dangers are never-ending such as the recent U.K. court ruling and DOJ antitrust case show.

The bottom line: Visa stock isn’t an investment, since it is currently in a lengthy consolidation, with an 252.77 purchase point. Be on the lookout for this Dow Jones card giant, since it is a good match with the top large-cap stocks that you can purchase or keep an eye on.