Visa Inc. (NYSE:V) stands poised for substantial growth, driven by increased payments, cross-border volumes, and processed transactions. The steady expansion of cross-border travel and data processing is expected to continue fueling its performance.
Headquartered in San Francisco, Visa is a global giant in payments technology, boasting a market capitalization of $426 billion. Over the year-to-date period, the company’s shares have surged by 11.3%, outperforming the industry’s 8.4% increase. Given its promising outlook, this stock, with a Zacks Rank #2 (Buy) designation, presents a compelling opportunity for inclusion in your investment portfolio.
Let’s take a closer look at the factors contributing to Visa’s appeal.
Visa is projected to achieve current-year earnings of $8.65 per share, reflecting a robust year-over-year growth rate of 15.3%. This estimate has remained steady over the past week. Notably, Visa has consistently exceeded earnings expectations in its last four quarters, with an average positive surprise of 5.2%.
The consensus estimate for current-year revenues for Visa is $32.6 billion, representing an impressive 11.2% increase from the previous year. Projections for service revenues and data processing revenues suggest gains of 11.5% and 10.2%, respectively, over the prior year, further bolstering its top-line growth.
In the fiscal year 2023, processed transactions for Visa are expected to surge by over 10% year over year. The company’s expanding network is set to drive transaction volumes higher, with total payment volume anticipated to grow by nearly 6% year over year. Visa’s numerous strategic partnerships are expected to stimulate network and technology usage.
Visa’s investments in technology are enhancing its already dominant position in the payments market. This not only helps mitigate the impact of fraud but also safeguards consumer and merchant information, a critical aspect as digital payment methods gain rapid popularity.
As economies continue to digitalize, Visa’s technological capabilities enable it to establish valuable partnerships with countries and governments. These collaborations position the company for sustained long-term growth. Visa’s commendable ability to innovate and tailor financial products to meet clients’ and customers’ needs further strengthens its competitive edge.
However, there are certain factors that investors should monitor closely. For instance, the bipartisan Credit Card Competition Act reintroduced in both the House and the Senate in June with additional co-sponsors, could intensify competition through the use of alternative credit card processing networks. Additionally, Visa’s escalating expenses raise concerns. Nonetheless, a systematic and strategic approach is expected to drive long-term growth.
Visa’s robust financial position, characterized by a healthy balance sheet and strong free cash flow generation, empowers the company to pursue acquisitions, invest in long-term growth opportunities, and enhance shareholder value. In the June quarter alone, Visa returned $3.9 billion to shareholders through share buybacks and dividends. As of June 30, 2023, the company still had authorized funds of $8.8 billion remaining under its share buyback program.
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