Company Overview: Visa Inc. (NYSE: V) is one of the world's leading payment processors. It enables global trade and money transfer among a worldwide collection of customers, merchants, financial institutions, and government entities spanning more than 200 countries and territories. During FY21, the company witnessed 232 billion payments and cash transactions through its brand, averaging 637 million each day. As a result, Visa processed 165 billion transactions out of the total 232 billion.
Key Takeaways from FY21 (ended September 30, 2021)
Revenues & Gross Profit Key Highlights; Analysis by Kalkine Group
Balance Sheet & Liquidity Position
Key Metrics: During FY21, Visa's EBITDA and net margins were 69.0% and 51.1%, significantly higher than the industry median of 19.0% and 3.5%, respectively. Its Debt/Equity ratio improved to 0.61x in FY21, from 0.77x in FY20.
Profitability Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 31.90% of the total shareholding, while the top 4 constitute the maximum holding. The Vanguard Group, Inc. and the BlackRock Institutional Trust Co. N.A. hold the maximum stake in the company at 8.65% and 4.72%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock remained relatively stable throughout the year. However, in the past six months, Visa corrected ~13.14%. The stock is currently leaning towards the lower band of its 52-week range of USD 190.10 to USD 252.67. We have valued the stock using the Price/Earnings-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a premium compared to its peer's average, considering its market dominance in the payment processing space, robust profit margins, and global market presence. We have taken peers like Mastercard, Inc. (NYSE: MA), Paypal Holdings, Inc. (NASDAQ: PYPL), and others. Considering the robust top and bottom-line performance, strong track record, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the current price of USD 200.85, up ~2.31%, as of December 06, 2021, 10:22 AM ET.
V Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
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