Key Takeaways From Visa’s Q2

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In continuation with its strong performance of late, Visa (NYSE: V) reported another impressive quarter in fiscal Q2. The company reported a 13% increase in revenue, net of client incentives, compared to the prior year quarter and managed to beat estimates comfortably. The number of processed transactions on Visa’s network increased by 12% over the same period. Shifts in exchange rates and the recent tax reforms led to adjusted net income of $2.6 billion (+26% y-o-y).

Our price estimate for Visa is around 20% below the current market price. We expect nearly 7% growth in the company’s overall revenue for the year 2018. We have created an interactive dashboard where you can change the company’s forecast revenue, margins, and other key drivers to gauge how they would impact its expected results and valuation.

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Visa is in an extremely strong position operationally. It has huge scale, as its credit and debit cards are accepted almost universally, it has a large number of co-branding partners, and its cards in circulation and volume of transactions processed far exceed those of its rivals. The company managed to grow its revenues in Q2 by growing client incentives 13% and operating expenses by 4% year over year. Moreover, the company has been consistently improving its operating margins by keeping expenses in check, in addition to the revenue growth. Its strong market position allows Visa a lot of leeway to give up some short-term profits for the consolidation of its market position in the medium to long term.

Please refer to our complete analysis for Visa

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