After Strong Results in Q1 FY2022, Is Visa Stock A Buy?

+9.19%
Upside
229
Market
250
Trefis
V: Visa logo
V
Visa

Visa’s stock (NYSE: V) has marginally increased YTD as compared to the 5% drop in the S&P500 over the same period. Further, at its current price of $214 per share, it is trading 17% below its fair value of $258 – Trefis’ estimate for Visa’s valuationThe company, a global electronic payment solutions provider, recently released its first-quarter FY2022 results (FY Oct-Sept), topping the consensus estimates of revenues and earnings. It reported net revenues of $7.1 billion which was 24% more than the previous year. This could be attributed to a 50% jump in international transaction revenues, followed by a 19% y-o-y growth in each of the domestic processing and services revenues. Notably, the international transactions revenues benefited from the 40% growth in the total cross-border volumes due to the easing of the Covid-19 related travel curbs in most parts of the world. Overall, it translated into a 27% y-o-y improvement in the net income to $3.96 billion. 

The company’s net revenues increased 10% y-o-y to $24.1 billion in FY 2021. This was primarily because of a 17% rise in each of the data processing and services revenues. Further, the international transactions revenues grew a meager 4% in the year. The international transactions segment suffered in 2020 and the first half of 2021 due to the Covid-19 related travel restrictions. However, the situation started to improve from the third quarter, which is also evident from the recovery in the cross-border transaction volume. Altogether, the net income increased 13% y-o-y to $12.3 billion in the year. 

The consumer spending levels are likely to improve in FY2022, with a recovery in the economic conditions. Further, the cross-border volumes are anticipated to grow on a year-on-year basis. Overall, Visa revenues are expected to touch $28.8 billion in FY2022. Additionally, Visa’s adjusted net income margin is likely to see a slight increase in the year. It will likely result in an adjusted net income of $15.2 billion and an annual EPS of $7.10. This coupled with a P/E multiple of just above 36x will lead to the valuation of $258.

Relevant Articles
  1. Visa Stock To Top Consensus In Q1?
  2. Is Visa Stock Fairly Priced At The Current Levels?
  3. Visa Stock To Beat The Earnings Consensus In Q4?
  4. What To Expect From Visa Stock?
  5. Visa Stock To Edge Past The Street Expectations In Q3?
  6. What To Expect From Visa Stock?

Here you’ll find our previous coverage of Visa stock, where you can track our view over time.

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 Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 V Return -1% -1% 175%
 S&P 500 Return 1% -7% 98%
 Trefis MS Portfolio Return 2% -9% 259%

[1] Month-to-date and year-to-date as of 3/28/2022
[2] Cumulative total returns since the end of 2016

 

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