How Steep Increase In Profit Margins Has Driven Visa’s EPS Growth

+5.71%
Upside
285
Market
301
Trefis
V: Visa logo
V
Visa

visa eps2

Visa’s profit margins in 2015 have grown considerably compared to its margins in 2012. Earnings per share has also grown because of this. Since, 2012 was an outlier in terms of financial performance for Visa, since it incurred an unusual expense item of $4 Billion in 2012, compared to $18 Million, $453 Million and $14 Million only in the subsequent years, this comparison seems over inflated. However, if we make the same comparison over the 2013-2015 period, we still see the same pattern of profit margin growth driving EPS growth.

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As we can see from the table above, even though revenue has grown at just 5.5% annually, EPS grew by over a third in the same period, nearly double the growth rate of revenue. While some of this(8 percentage points) was contributed by share buybacks, most of this growth came from increasing margins.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Visa
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