Visa (V) is a company with an excellent track record in terms of earnings and is making further moves in digital payment. Are you convinced that Visa stock a good investment at this time?
Dow Jones is the Dow Jones stock dominates U.S. credit card networks based on transactions and the number of cards that are that are in circulation. There is plenty of room to increase its share of digital payments and is also pursuing new opportunities on fintech and cryptocurrency.
On December. 8th, 2021 Visa announced their Global Crypto Advisory Practice. This practice is part of Visa Consulting & Analytics “designed in order to help partners and customers in their journey towards cryptocurrency,” Visa said in the statement.
And, in the meantime, Visa, Mastercard (MA) and American Express (AXP) are trying to penetrate the emerging market, PayPal (PYPL) made its debut into the Chinese market for digital payments by acquiring the GoPay purchase last year.
Both Mastercard stock as well as PayPal stock are both on the IBD Long-Term Leaders list.
On 5 March 2022 Visa announced that it was discontinuing service in Russia due to sanctions over the country’s invasion into Ukraine. In the past, Visa also pledged $2 million for humanitarian assistance.
Visa Stock: Fundamental Analysis
Visa and Mastercard along in conjunction with China’s UnionPay are the world’s largest online payment platforms. Mastercard and Visa accept card transactions, however they don’t issue credit cards.
Additionally, Visa and Mastercard have less risk of interest rate risk. Visa doesn’t earn income from nor assumes risk linked to the fees or interest charged by cardholders. However, Visa derives revenue from customer services, data processing trans-border transactions, value-added services such as licensing fees. The Visa network spans more than 200 countries and territories.
Over the last three months, Visa has averaged 4 percent increase in EPS and 2% growth in sales as per the IBD Stock Checkup tool. For key earnings and sales indicators, Visa stock earns an EPC Rating of 91 out of 100, with an SMR Rating that is A. The EPS Rating reflects the health of a company’s fundamental earningsand the SMR Rating is a measure of sales growth as well as profit margins and returns on equity.
Visa Earnings
On the 27th of April, Visa posted strong Q2 earnings, despite a surge in travel. The result sent the stock up by 8% within the day.
Visa announced second-quarter FY 2022 profits in the range of $1.79 per share, which is a 30% increase from the previous year and surpassing the Zacks Consensus forecast by 8.5 percent. Revenues grew 25% over the past year to $7.2 billion. It also beat expectations by 5percent.
The quarterly results of Visa were boosted by a strong increase in the volume of payments, processed transactions, and cross-border volumes which was partially offset by the increase in operating expenses.
Visa Stock Technical Analysis
The giant of payments has a buy-point of 252.77 due to a consolidation according to MarketSmith analysis of charts. Shares jumped up after earnings for Q2 and surpassed the 50-day mark, and Visa’s relative strength line has been moving back up.
Shares have the company an IBD Composite Rating of 89 points out of a maximum 99. It combines the most important technical and fundamental indicators into one score. An RS score of 64 is lower than the 80 mark or higher investors in the top growth stocks would like to see.
The C+ Accumulation/Distribution Rating reflects an equal amount of buying and selling by institutional investors in the past 13 weeks. Visa stock is extremely traded, with more than 8 million shares traded during a typical day.
Half of all outstanding shares are held by mutual funds. 5,611 funds held Visa stock at the time March 2022, an increase from 5,550 shares in December 2021.
Visa Eyes Cryptocurrencies, Fintech
On January. 13 Visa unveiled a new platform called Visa Acceptance Cloud (VAC). VAC extends it’s “Tap to Phone” payment solution, which allows nearly every device into a payment terminal that is connected to the cloud.
“Expanding over phones,” Visa Acceptance Cloud enables any POS device or other connected device to effortlessly accept payments and integrate a variety of services that can be added, such as buy now and pay later, as well as fraud management, rapid Seller Onboarding and advanced analytics on data,” the company said in an announcement.
On August. 23 Visa announced that it had purchased the CyperPunk NFT on August. 19 for $150,000 in Ethereum. The art work is Visa’s very first foray into NFTs. A rare collection of CryptoPunks, which were among the first batch of 1,000 coins issued for more than $17 million at Christie’s auction last year.
On August. 16 Visa announced a partnership with PayNearby the world’s largest branchless bank and digital payment network along with RBL Bank to launch SoftPoS and mPOS for its 1.5 million plus retail network.
While SoftPoS lets merchants accept contactless payment transactions using simple pay and tap mechanism for smartphones that support NFC PayNearby’s 2-in-1 micro ATM and MPOS machine permits simple acceptance of debit and credit cards in the final mile.
On March 29 Visa announced that it would be the first major payment system to accept transactions in USD Coin, a stablecoin that is backed with the U.S. dollar, over Ethereum.
Visa is testing the possibility through Crypto.com which is one of the largest Visa associate and among the most renowned cryptocurrency platforms. It is planning to extend the USDC settlement facility to other partners later in the year.
In partnership with Anchorage one of the very first digital assets chartered by a federally-chartered bank Visa has announced the pilot program that will allow Crypto.com to transfer USD coin to Visa to pay a part of its obligations to its Crypto.com Visa Card program.
Visa Partners With BlockFi
On July 6th, Visa joined forces with the financial tech company BlockFi to introduce the 2percent Bitcoin reward credit card for U.S-based residents.
In the meantime, on the 24th of June, Visa said it’s buying Swedish fintech company Tink at a price of $2 billion. Tink will be able to attract over 250 million clients in more than 3,400 financial and banking institutions across Europe.
Visa hopes to make its mark in the rapidly growing open banking market in Europe. Open banking allows financial institutions to access customer data and data in other institutions, provided customers have consent.
Financial startups that cater to consumers and banks utilize Tink’s tools to build applications and other tools that enable customers to manage accounts from various institutions from one location.
Visa recently added a crypto lender Cred which uses Visa’s network for sending interest payments to customers who have bank accounts.
Visa Outlook
As more countries relax or lift Covid restrictions and travel speeds up across the globe, Visa payments volume, processed transactions, and trans-border volume are increasing. The term is used to describe transactions between merchants and shoppers from various countries.
An earlier Mastercard survey has revealed it was the first time in the pandemicbegan, business travel bookings have surpassed the 2019 average, which is a significant step to the recovery. The majority of travel is attributed to airlines, but business, has lag behind the growth in travel for consumers according to the report.
If trends in booking flights continue to grow at the rate they are the estimated 1.5 billion more people worldwide will travel by 2022 as when compared to last year’s numbers in a study conducted by the Mastercard Economics Institute.
Did you know? You can find information and the Visa Stock forecast 2025 over at stockforecast.com
However, one positive aspect in the midst of the pandemic is the continuing shift towards e-commerce worldwide sales.
“This helps us since Visa’s share of online commerce, in which cash isn’t the option around three times higher than that at the point where the sale is physically made” Visa said.
Digital payments, driven by the growth of 5G networks can be a lucrative growth area. Visa’s push to make payments real-time technology has seen rapid growth in the aftermath of the epidemic.
The announcement was made in June of 2021. Visa has announced that it will be partnering together with Facebook (FB) to offer WhatsApp transactions in Brazil. WhatsApp is used by 120 million people across the largest Brazil located in South America.
Brazil’s central bank approved payments through WhatsApp Chat in the month of July, 2021. This was after temporarily suspending the newly launched service and directing Visa as well as Mastercard to stop such transactions. The central bank pointed to the risks of data privacy and competition in its decision.
Visa And Coronavirus
The effect of Omicron is turning out to be less severe than originally thought. Tourists have returned to their vacations and are spending more on gas, airline tickets rental cars hotels, restaurant stays and hotel stays. This is a good thing for Visa since its most-hit segment during the outbreak was food, fuel, travel and entertainment. This segment accounts for the third part of Visa’s U.S. payments volume.
A majority of Europe is still accessible for U.S. tourists, although vaccinations are mandatory. But overall, international travel isn’t expected to increase to levels until 2022 due to a slow recovery in Asia with its more strict Covid regulations.
In the end an escalating decline in global economic growth and consumer spending could pose the biggest threat to Visa stocks, following the coronavirus triggered the shock of demand.
Visa is also trying to capitalize on opportunities from the epidemic. One of the areas is contactless payments. Even countries where adoption of tap-topay was slow are growing faster in the epidemic.
Over 500 towns across the globe have embraced the tap-to-pay or contactless payment method that are powered by Visa as the process of revival of public transportation gets underway.
However, Covid has also “permanently shortened the cash-to-card-conversion runway” for Visa, according to analyst Dan Dolev at Mizuho Group. The segment has historically been the primary revenue generator for Visa. It’s accounted for about 45 percent of the revenue growth, Dolev says in a recent letter to customers.
Dolev says the growing popularity of account-to-account payment firms like Plaid, real-time payment options like FedNow and the buy-now-pay-later trend, among other decentralized-financing trends will chip away at Visa’s dominance in the payments market.
The result was that Dolev has downgraded Visa stocks to buy from neutral and reduced his price goal down to 220 instead of 255 in January. 7.
The Rival Stocks of Payments to Visa
Highly rated companies from IBD’s payment processing department comprise Square (SQ) as well as PayPal. The other rivals of Visa that are well-established are American Express and Discover.
Paysign (PAYS) is a new playerthat focuses on healthcare in addition to online recruitment. PagSeguro Digital (PAGS) and Qiwi (QIWI) are two other names to keep an eye on. Brazilian company StoneCo (STNE) which is backed by Warren Buffett, is also one worth watching.
Legendary investor Buffett also holds tiny stakes in Visa stock as well as Mastercard stock. He also has a large stake on American Express stock.
The group that handles payments is at the bottom of the list. among the 197 industries monitored by IBD. Visa stock ranks No. 8 in this category; American Express is No. 3, and Mastercard is No. 2, and Square stocks are No. 11. PayPal stock is no. 21.
Is Visa Stock A Buy?
It is believed that the Dow Jones card giant has an overwhelming share of the rapidly expanding market of digital payments. Visa’s earnings are recovering as the headwinds of coronavirus diminish.
Additionally, Visa is also a top stock for payments in an industry sector that is performing well.
Sure, the competition in digital payment is fierce. Global economic, legal and regulatory dangers are never-ending such as the recent U.K. court ruling and DOJ antitrust case show.
The bottom line: Visa stock isn’t an investment as it’s in a month-long consolidation, with an 252.77 purchase point. Be on the lookout for it. Dow Jones card giant, because it’s a great match to the top large-cap stocks that you can purchase or keep an eye on.