Visa Inc. (NYSE: $V) is an American multinational payment card services corporation headquartered in San Francisco, California. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit cards, and prepaid cards. Visa is one of the world’s most valuable companies.
Visa does not issue cards, extend credit or set rates and fees for consumers; rather, Visa provides financial institutions with Visa-branded payment products that they then use to offer credit, debit, prepaid, and cash access programs to their customers.
In 2015, the Nilson Report, a publication that tracks the credit card industry, found that Visa’s global network (known as VisaNet) processed 100 billion transactions during 2014 with a total volume of US$6.8 trillion.
Visa was founded in 1958 by Bank of America (BofA) as the BankAmericard credit card program. In response to competitor Master Charge (now Mastercard), BofA began to license the BankAmericard program to other financial institutions in 1966.
Why You Should Consider Investing In Visa Stock
Visa (V) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock’s performance in the near term.
Over the past month, shares of this global payments processor have returned -5.7%, compared to the Zacks S&P 500 composite’s -2.9% change. During this period, the Zacks Financial Transaction Services industry, in which Visa falls, has lost 3.8%. The key question now is: What could be the stock’s future direction?
Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Visa Earnings Estimate Revisions
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company’s earnings projection. This is because we believe the fair value of its stock is determined by the present value of its future stream of earnings.
A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Visa is expected to post earnings of $2.23 per share for the current quarter, representing a year-over-year change of +15.5%. Over the last 30 days, the Zacks Consensus Estimate has changed by 0%.
The consensus earnings estimate of $8.65 for the current fiscal year indicates a year-over-year change of +15.3%. This estimate has remained unchanged over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $9.77 indicates a change of +13% from what Visa is expected to report a year ago. Over the past month, the estimate has changed by +0.1%.
It hasn’t been all Sunshine and Roses
What kept Visa in favor among investors is that they aren’t a bank or lender. They didn’t make loans of any sort and had no connection at all to the mortgages that caused the financial crisis. Visa is nothing more than a payment network, collecting a small fee for every time a credit or debit card with the Visa logo is used.
Despite that, Visa still wasn’t able to sidestep the negative sentiment surrounding the financial sector in 2008, and by January 20, 2009, Visa stock had ended at its all-time low of $42.42 a share. The stock spent the rest of 2019 rising, and by April 2010, it had nearly reached $100 a share.
However, in May 2010, shares plummeted again as the Durbin Amendment, which had the goal of making processing debit transactions less profitable, was debated in Congress. Visa stock fell to a low of $68.28 a share as investors broadly feared that profits would be regulated away.
Over a year later in June 2011, the final rule was issued by the Federal Reserve, capping fees at $0.21 plus 0.05% of the transaction amount. Visa shareholders breathed a sigh of relief, and share prices rocketed, going from $75 on July 28, 2011, to more than $86 the next day.
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