Global payments giant Visa (NYSE: V) has recently demonstrated resilient double-digit growth and is poised to sustain this momentum. Despite a modest revenue slowdown in the past year, Visa’s recent results have reignited investor confidence.
Visa is set to announce its fiscal third-quarter earnings for 2024 after the market closes on Tuesday, July 23. Analysts expect the company to report a profit of $2.41 per share, up 11.6% from $2.16 per share in the year-ago quarter.
Notably, the company has consistently surpassed Wall Street’s EPS estimates in its last four quarterly reports.
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For fiscal 2024, analysts project an EPS of $9.94, up 13.3% from $8.77 in fiscal 2023.
Earlier this year, Visa completed its acquisition of Pismo, enhancing its capabilities in core banking and card-issuer processing.
This strategic move positions Visa to better support emerging payment schemes and real-time payment networks, potentially boosting its competitive edge and stock valuation.
Visa’s Q2 results highlighted impressive revenue growth of 9.9%, driven by strong payment volumes, increased processed transactions, and higher cross-border volume. Visa’s global payment volume increased by 8% year-over-year, while processed transactions grew by 11% year-over-year, showcasing the steady rise in transactions handled by Visa’s network.
Strategic partnerships driving expansion
Visa’s New Flows segment, which includes alternative payments like Visa Direct, saw a revenue increase of 14% year-over-year, with transactions up by 31%.
This segment is capitalizing on a global market opportunity of $20 trillion in consumer payments, expanding its tap-to-pay business, and targeting automated clearing house (ACH) payments to replace traditional check payments.
Moreover, Visa recently partnered with HSBC Holdings plc (NYSE: HSBC) to develop the Zing app, enabling users to hold and send money in multiple currencies globally.
The integration of technologies like Currencycloud and Tink will enhance Visa’s cross-border solutions, driving increased transaction volumes and revenue.
This strategic move is expected to positively impact Visa’s share price by boosting investor confidence and demonstrating its innovation and market expansion capabilities.
Valuation metrics and investment potential
Visa’s valuation metrics indicate a strong position relative to its earnings and future growth prospects. The trailing PE ratio stands at 29.97, while the forward PE ratio is 25.24. The PEG ratio is 1.71, suggesting that Visa’s stock price is justified given its growth rate.
Additionally, the price-to-sales (PS) ratio is 15.73, with a forward PS ratio of 13.98. The price-to-book (PB) ratio is 13.27, and the price-to-free cash flow (P/FCF) ratio is 27.23.
These metrics highlight Visa’s profitability and robust financial health, making it an attractive investment.
Analysts estimate Visa prospects for the rest of 2024
The consensus among Wall Street analysts remains decidedly bullish. Visa’s stock is considered a ‘strong buy’ overall, with 17 out of the 21 experts giving a ‘buy rating’.
The remaining 4 analysts recommend holding, with none suggesting selling. The average price target is $315.42, with a high forecast of $345 and a low forecast of $275 The average price target represents a 16.91% change from the last price of $269.
In conclusion, Visa’s strong financial health, strategic acquisitions, and innovative partnerships position it well for sustained growth.
With robust valuation metrics and optimistic analyst ratings, Visa remains an attractive investment opportunity in the payments industry.
However, investors should exercise caution and conduct their own research to ensure these investments align with their risk tolerance.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
