Visa trades at $370.11 per share and has stayed right on track with the overall market, gaining 12.4% over the last six months. At the same time, the S&P 500 has returned 11.8%.
Is now the time to buy V? Find out in our full research report, it’s free.
Why Are We Positive on V?
Processing over 829 million transactions daily and connecting billions of cards to 150 million merchant locations worldwide, Visa (NYSE: V) operates one of the world's largest electronic payments networks, facilitating secure money movement across more than 200 countries through its VisaNet processing platform.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
Over the last five years, Visa grew its revenue at a solid 14.5% compounded annual growth rate. Its growth surpassed the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Visa’s EPS grew at 18.8% compounded annual growth rate over the last five years, higher than its 14.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for financial firms. Over a long period, financial firms with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.
Over the last five years, Visa has averaged an ROE of 49.2%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Visa has a strong competitive moat.
Final Judgment
These are just a few reasons why we think Visa is a high-quality business. At $370.11 per share (or 25.3× forward P/E), is now the time to initiate a position? See for yourself in our full research report, it’s free.
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