Visa Inc. - Revision history

Manos at 07:49, 21 August 2023

2023-08-21T07:49:15Z

← Older revision		Revision as of 08:49, 21 August 2023
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	Visa Inc. ~~operates as~~ a payments technology ~~company worldwide~~. ~~The company facilitates digital payments among~~ consumers, merchants, financial institutions, businesses, strategic partners, and ~~government entities~~. ~~It operates~~ VisaNet, ~~a transaction processing network that enables~~ authorization, clearing, and settlement of payment transactions. ~~In addition~~, ~~the company offers~~ card products, platforms, and value-added ~~services. It provides its~~ services under ~~the~~ Visa, Visa Electron, Interlink, VPAY, and PLUS ~~brands~~. ~~Since being founded~~ in 1958 ~~they~~ now ~~control~~ 40% of the global market ~~shares in payments~~ processing ~~across the globe and possess~~ the most secure and reliable ~~digital transaction processing infrastructure in the industry with a net worth of over~~ $500 billion. The ~~company operates~~ in ~~an essential, irreplaceable industry and their network cannot be replicated ensuring their~~ financial ~~security~~. ~~Visa has been dominating~~ the ~~market for~~ 15 years ~~(with~~ impressive ~~increasing~~ net income ~~over these years) and has maintained~~ a ~~superiority over their competitors over this time period and appears~~ to ~~be performing extremely well~~ as ~~it is currently~~ the 10th most ~~valued~~ company ~~in the world~~. ~~The company is~~ listed on New York Stock Exchange, S&P 500 ~~stock market~~ and Dow Jones Industrial Average, at ~~a stock price of~~ $240 per share. ~~Based on the~~ Discounted Cash Flow and Multiples valuation, ~~the~~ Visa Inc stock is undervalued ~~and~~ a buy recommendation ~~is issued~~.		Visa Inc. is a global payments technology leader. Serving consumers, merchants, financial institutions, businesses, strategic partners, and governments, the company stands at the forefront of digital payments. Its core infrastructure, VisaNet, ensures seamless authorization, clearing, and settlement of payment transactions. Beyond this, Visa provides an array of card products, platforms, and value-added services under renowned brands such as Visa, Visa Electron, Interlink, VPAY, and PLUS.

			Founded in 1958, Visa now commands a formidable 40% of the global payment processing market share. Its robust digital transaction processing system is hailed as the industry's most secure and reliable, validating its $500 billion net worth. The uniqueness of Visa's network and its indispensability in the financial landscape safeguard its fiscal strength.

			For the past 15 years, Visa has consistently outperformed its competitors, witnessing an impressive growth in net income. It stands as a testament to its excellence, currently ranking as the 10th most valuable company globally. Investors can find Visa listed on the New York Stock Exchange, S&P 500, and Dow Jones Industrial Average, with its stock priced at $240 per share.

			According to both Discounted Cash Flow and Multiples valuation methods, Visa Inc.'s stock is undervalued, making it a strong buy recommendation.

	== Introduction ==		== Introduction ==

95.149.161.192 at 07:45, 21 August 2023

2023-08-21T07:45:23Z

@@ Line 1: / Line 1: @@
-<references />
+{{Infobox company
+| name = Visa Inc.
-== Executive Summary ==
+| logo = Visa 2021.svg
 Visa Inc. operates as a payments technology company worldwide. The company facilitates digital payments among consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. In addition, the company offers card products, platforms, and value-added services. It provides its services under the Visa, Visa Electron, Interlink, VPAY, and PLUS brands. Since being founded in 1958 they now control 40% of the global market shares in payments processing across the globe and possess the most secure and reliable digital transaction processing infrastructure in the industry with a net worth of over $500 billion. The company operates in an essential, irreplaceable industry and their network cannot be replicated ensuring their financial security. Visa has been dominating the market for 15 years (with impressive increasing net income over these years) and has maintained a superiority over their competitors over this time period and appears to be performing extremely well as it is currently the 10th most valued company in the world. The company is listed on New York Stock Exchange, S&P 500 stock market and Dow Jones Industrial Average, at a stock price of $240 per share. Based on the Discounted Cash Flow and Multiples valuation, the Visa Inc stock is undervalued and a buy recommendation is issued.

>RayyanChagani at 12:28, 12 August 2023

2023-08-12T12:28:01Z

← Older revision		Revision as of 13:28, 12 August 2023
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	Visa Inc can be adversely affected by the outcome of litigation or investigations. The company is involved in numerous litigation matters, investigations, and proceedings asserted by civil litigants, governments, and enforcement bodies investigating or alleging, among other things, violations of competition and antitrust law, consumer protection law, privacy law and intellectual property law. These actions are inherently uncertain, expensive and disruptive to Visa operations and the liabilities could materially harm the financial condition or cash flows, or even cause insolvency.		Visa Inc can be adversely affected by the outcome of litigation or investigations. The company is involved in numerous litigation matters, investigations, and proceedings asserted by civil litigants, governments, and enforcement bodies investigating or alleging, among other things, violations of competition and antitrust law, consumer protection law, privacy law and intellectual property law. These actions are inherently uncertain, expensive and disruptive to Visa operations and the liabilities could materially harm the financial condition or cash flows, or even cause insolvency.
			== References ==

			<small><nowiki>https://stockanalysis.com/stocks/v/market-cap/</nowiki></small>

			<small><nowiki>https://en.wikipedia.org/wiki/Visa_Inc.#History</nowiki></small>

			<small><nowiki>https://balancingeverything.com/credit-card-market-share/</nowiki></small>

			<small><nowiki>https://www.investopedia.com/visa-top-shareholders-5094563</nowiki></small>

			<small><nowiki>https://www.bankrate.com/finance/credit-cards/credit-card-market-share-statistics</nowiki></small>

			<small><nowiki>https://www.paymentscardsandmobile.com/unionpay-accounts-for-45-of-global-cards-spending-visa-still-on-top/</nowiki></small>

			<small><nowiki>https://www.bankrate.com/finance/credit-cards/credit-card-market-share-statistics/#cards</nowiki></small>

			<small><nowiki>https://www.visa.co.uk/our-purpose/leading-by-example.html</nowiki></small>

			<small><nowiki>https://businessmodelanalyst.com/visa-business-model/</nowiki></small>

			<small><nowiki>https://annualreport.visa.com/business-overview/</nowiki></small>

			<small><nowiki>https://www.macrotrends.net/stocks/charts/V/visa/net-income</nowiki></small>

			<small><nowiki>https://www.investopedia.com/how-visa-makes-money-4799098</nowiki></small>

			<small><nowiki>https://usa.visa.com/dam/VCOM/global/about-visa/documents/visanet-factsheet.pdf</nowiki></small>

			<small><nowiki>https://www.cbinsights.com/investor/visa</nowiki></small>

			<small><nowiki>https://www.globaldata.com/company-profile/visa-inc/</nowiki></small>

			<small><nowiki>https://www.barrons.com/articles/visa-mastercard-undervalued-stocks-buy-922575</nowiki></small>

			<small><nowiki>https://www.macrotrends.net/stocks/charts/V/visa/net-income</nowiki></small>

			<small><nowiki>https://annualreport.visa.com/financials/default.aspx</nowiki></small>

			<small><nowiki>https://financhill.com/blog/investing/where-will-visa-be-in-5-years</nowiki></small>

			<small><nowiki>https://www.macrotrends.net/stocks/charts/V/visa/stock-price-history</nowiki></small>

			<small><nowiki>https://en.wikipedia.org/wiki/Visa_Inc.#Finance</nowiki></small>

			<small><nowiki>https://craft.co/visa/competitors</nowiki></small>

			<small><nowiki>https://www.finextra.com/pressarticle/65412/unionpay-takes-top-spot-from-visa-in-22-trillion-global-cards-market---rbr</nowiki></small>

			<small><nowiki>https://www.valuepenguin.com/visa-vs-mastercard-is-one-better#</nowiki></small>

			<small><nowiki>https://portfolioslab.com/symbol/V</nowiki></small>

>RayyanChagani at 12:20, 12 August 2023

2023-08-12T12:20:06Z

← Older revision		Revision as of 13:20, 12 August 2023
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			<references />

	== Executive Summary ==		== Executive Summary ==

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	== Industry Overview ==		== Industry Overview ==
	As previously stated, due to the nature of its target market being substantially involved in worldwide commerce, Visa’s position as the largest global digital payment technology company in an indispensable industry both guarantees its future and its success.		As previously stated, due to the nature of its target market being substantially involved in worldwide commerce, Visa’s position as the largest global digital payment technology company in an indispensable industry both guarantees its future and its success. In this industry the total addressable market is any trade or commerce with non-cash based transactions worldwide of which Visa currently has a market share of roughly 40%. 34% of the available worldwide market is currently dominated by UnionPay International mainly due to their influence in the Chinese market. Although technically “possible”, it would be extremely unlikely and not worth the risk for Visa to invest into the Chinese transactions services market as the investment required would not lead to a guaranteed increase in market share. Alternatively, Visa chooses to strengthen its existing business model in order to claim market share from its main “real” competitor MasterCard (24% market share) as well as smaller competitors such as PayPal and American Express. Visa and Mastercard are by far the largest and cover above 80% of the global market share excluding China, however, Visa shows the highest net income in comparison to its alternative service providers and has done so for multiple years due to its effective infrastructure and electronic network.
	In this industry the total addressable market is any trade or commerce with non-cash based transactions worldwide of which Visa currently has a market share of roughly 40%. 34% of the available worldwide market is currently dominated by UnionPay International mainly due to their influence in the Chinese market. Although technically “possible”, it would be extremely unlikely and not worth the risk for Visa to invest into the Chinese transactions services market as the investment required would not lead to a guaranteed increase in market share. Alternatively, Visa chooses to strengthen its existing business model in order to claim market share from its main “real” competitor MasterCard (24% market share) as well as smaller competitors such as PayPal and American Express. Visa and Mastercard are by far the largest and cover above 80% of the global market share excluding China, however, Visa shows the highest net income in comparison to its alternative service providers and has done so for multiple years due to its effective infrastructure and electronic network.

	Visa’s key strengths over its major competitor MasterCard is that Visa cards offer a few more benefits such as their “Lost or Stolen Card Reporting”, insurance options, “special guest” status at luxury hotels, roadside dispatch and other perks. Visa and Mastercard are both accepted almost anywhere in the world unlike other competitors. Yet Visa is the highest valued out of all of its competitors with the highest net income (generating $14.9b in 2022.) with a return of 15.85% year-to-date (YTD) and 13.94% in the last 12 months. Over the past 10 years, Visa Inc. had an annualised return of 19.09%, outperforming the S&P 500 benchmark which had an annualised return of 10.28%.		Visa’s key strengths over its major competitor MasterCard is that Visa cards offer a few more benefits such as their “Lost or Stolen Card Reporting”, insurance options, “special guest” status at luxury hotels, roadside dispatch and other perks. Visa and Mastercard are both accepted almost anywhere in the world unlike other competitors. Yet Visa is the highest valued out of all of its competitors with the highest net income (generating $14.9b in 2022.) with a return of 15.85% year-to-date (YTD) and 13.94% in the last 12 months. Over the past 10 years, Visa Inc. had an annualised return of 19.09%, outperforming the S&P 500 benchmark which had an annualised return of 10.28%.

>Shahlo at 13:47, 11 August 2023

2023-08-11T13:47:11Z

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	''1.Evolving business regulations:''		''1.Evolving business regulations:''

	Visa is subject to a number of regulatory risks including the anti-corruption and anti money laundering laws and regulations such as the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, the U.S. Bank Secrecy Act and the economic and trade sanctions programs administered by the Office of Foreign Assets Control (OFAC), that prohibit the company from offering improper payments to foreign government officials and political figures and serving population that is domiciled in countries subject OFAC trade sanctions (currently, Cuba, Iran, North Korea, Syria and Crimea).		Visa is subject to a number of regulatory risks including the anti-corruption and anti money laundering laws and regulations such as the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, the U.S. Bank Secrecy Act and the economic and trade sanctions programs administered by the Office of Foreign Assets Control (OFAC), that prohibit the company from offering improper payments to foreign government officials and political figures and serving population that is domiciled in countries subject OFAC trade sanctions (currently, Cuba, Iran, North Korea, Syria and Crimea). Additionally, certain governments, including China, India, Indonesia, Thailand and Vietnam, have taken actions to promote domestic payments systems by imposing regulations that favour domestic providers, local ownership requirements on processors, require data localization and mandate that domestic processing be done in that country
	Additionally, certain governments, including China, India, Indonesia, Thailand and Vietnam, have taken actions to promote domestic payments systems by imposing regulations that favour domestic providers, local ownership requirements on processors, require data localization and mandate that domestic processing be done in that country

	Many jurisdictions have adopted regulations that require payment system participants to monitor, identify, filter, restrict or take other actions with regard to certain types of payment transactions on the Internet, such as gambling, digital currencies, the purchase of cigarettes or alcohol and other controversial transaction types. As well, there are an increasing number of jurisdictions around the world that regulate or influence debit and credit interchange reimbursement rates in their regions. Complying with these and other regulations increases Visa costs and reduces the company revenue opportunities.		Many jurisdictions have adopted regulations that require payment system participants to monitor, identify, filter, restrict or take other actions with regard to certain types of payment transactions on the Internet, such as gambling, digital currencies, the purchase of cigarettes or alcohol and other controversial transaction types. As well, there are an increasing number of jurisdictions around the world that regulate or influence debit and credit interchange reimbursement rates in their regions. Complying with these and other regulations increases Visa costs and reduces the company revenue opportunities.
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	''2. Macroeconomic conditions''		''2. Macroeconomic conditions''

	Additionally, international cross-border transaction revenues represent a significant part of the company revenue and are an important part of the growth strategy. Based on the annual report more than half of the net revenues are earned outside the U.S. Revenues are dependent on the volume and number of payment transactions made by consumers, governments, and businesses whose spending patterns may be affected by economic, political, market, health and social events or conditions. Adverse macroeconomic conditions within the U.S. or internationally, including but not limited to recessions, inflation, rising interest rates, high unemployment, currency fluctuations, actual or anticipated large-scale defaults or failures, rising energy prices, or a slowdown of global trade, and reduced consumer, small business, government, and corporate spending, have a direct impact on our volumes, transactions and revenues. Covid-19 pandemic and ongoing Ukraine war as an example.		Additionally, international cross-border transaction revenues represent a significant part of the company revenue and are an important part of the growth strategy. Based on the annual report more than half of the net revenues are earned outside the U.S. Revenues are dependent on the volume and number of payment transactions made by consumers, governments, and businesses whose spending patterns may be affected by economic, political, market, health and social events or conditions. Adverse macroeconomic conditions within the U.S. or internationally, including but not limited to recessions, inflation, rising interest rates, high unemployment, currency fluctuations, actual or anticipated large-scale defaults or failures, rising energy prices, or a slowdown of global trade, and reduced consumer, small business, government, and corporate spending, have a direct impact on our volumes, transactions and revenues. Covid-19 pandemic and ongoing Ukraine war as an example.

	'''Litigation Risk:'''		'''Litigation Risk:'''

	Visa Inc can be adversely affected by the outcome of litigation or investigations. The company is involved in numerous litigation matters, investigations, and proceedings asserted by civil litigants, governments, and enforcement bodies investigating or alleging, among other things, violations of competition and antitrust law, consumer protection law, privacy law and intellectual property law. These actions are inherently uncertain, expensive and disruptive to Visa operations and the liabilities could materially harm the financial condition or cash flows, or even cause insolvency.		Visa Inc can be adversely affected by the outcome of litigation or investigations. The company is involved in numerous litigation matters, investigations, and proceedings asserted by civil litigants, governments, and enforcement bodies investigating or alleging, among other things, violations of competition and antitrust law, consumer protection law, privacy law and intellectual property law. These actions are inherently uncertain, expensive and disruptive to Visa operations and the liabilities could materially harm the financial condition or cash flows, or even cause insolvency.

>Shahlo at 13:29, 11 August 2023

2023-08-11T13:29:51Z

← Older revision		Revision as of 14:29, 11 August 2023
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	'''Terminal value'''		'''Terminal value'''

	The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy.		The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy. Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $362m.
	~~[[File:Implied.jpg\|thumb\|487x487px]]~~		[[File:Oo.jpg\|thumb\|480x480px]]
	Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $362m.

	'''Equity value'''		'''Equity value'''

	Based on the analysis the equity value of the company is $398m. Given the total shares outstanding of 1,096 million, implied share price $363. Based on this valuation and relative to the actual share price of $240, the company is undervalued and a buy recommendation is issued.		Based on the analysis the equity value of the company is $398m. Given the total shares outstanding of 1,096 million, implied share price $363. Based on this valuation and relative to the actual share price of $240, the company is undervalued and a buy recommendation is issued.

	'''Multiple Valuation:'''		'''Multiple Valuation:'''

>Shahlo at 08:32, 11 August 2023

2023-08-11T08:32:44Z

← Older revision		Revision as of 09:32, 11 August 2023
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	The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy.		The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy.
	[[File:Implied.jpg\|thumb\|487x487px]]		[[File:Implied.jpg\|thumb\|487x487px]]
	Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $~~330m~~.		Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $362m.

	'''Equity value'''		'''Equity value'''

	Based on the analysis the equity value of the company is $~~360.7m~~. Given the total shares outstanding of 1,096 million, implied share price $~~329~~. Based on this valuation and relative to the actual share price of $~~239~~, the company is undervalued and a buy recommendation is issued.		Based on the analysis the equity value of the company is $398m. Given the total shares outstanding of 1,096 million, implied share price $363. Based on this valuation and relative to the actual share price of $240, the company is undervalued and a buy recommendation is issued.

			'''Multiple Valuation:'''

	~~Multiple Valuation:~~
	In addition to the DCF, a multiples valuation analysis was conducted to see if it supports my conclusions from the DCF. The closest competitors were selected in order to obtain the multiples. The multiple valuation shows that with the current price being $240, all valuations methodologies suggest that Visa Inc is undervalued compared to its competitors.		In addition to the DCF, a multiples valuation analysis was conducted to see if it supports my conclusions from the DCF. The closest competitors were selected in order to obtain the multiples. The multiple valuation shows that with the current price being $240, all valuations methodologies suggest that Visa Inc is undervalued compared to its competitors.
			[[File:Multiple.jpg\|center\|thumb\|438x438px]]

	== Risk ==		== Risk ==

>Shahlo at 08:28, 11 August 2023

2023-08-11T08:28:26Z

← Older revision		Revision as of 09:28, 11 August 2023
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	Based on the analysis the equity value of the company is $360.7m. Given the total shares outstanding of 1,096 million, implied share price $329. Based on this valuation and relative to the actual share price of $239, the company is undervalued and a buy recommendation is issued.		Based on the analysis the equity value of the company is $360.7m. Given the total shares outstanding of 1,096 million, implied share price $329. Based on this valuation and relative to the actual share price of $239, the company is undervalued and a buy recommendation is issued.

			Multiple Valuation:
			In addition to the DCF, a multiples valuation analysis was conducted to see if it supports my conclusions from the DCF. The closest competitors were selected in order to obtain the multiples. The multiple valuation shows that with the current price being $240, all valuations methodologies suggest that Visa Inc is undervalued compared to its competitors.

	== Risk ==		== Risk ==

>Shahlo: /* Financials */

2023-08-11T08:06:38Z

Financials

← Older revision		Revision as of 09:06, 11 August 2023
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	* Capex: As an asset light model, Visa is expected to keep about 11.42% of revenues as capital expenditures (CAPEX) in the future. The company’s capex was about 12.53% of the revenues in 2020 but has decreased to 11% in and 2022. As Visa is expecting to continue investing in technology assets and payments system infrastructure, as well as revenue is expected to increase, CAPEX is assumed to represent 11.42%.		* Capex: As an asset light model, Visa is expected to keep about 11.42% of revenues as capital expenditures (CAPEX) in the future. The company’s capex was about 12.53% of the revenues in 2020 but has decreased to 11% in and 2022. As Visa is expecting to continue investing in technology assets and payments system infrastructure, as well as revenue is expected to increase, CAPEX is assumed to represent 11.42%.
	* Net change in working capital: Visa is managing its liquidity risk by investing excess cash in securities that enable the company to meet its working capital and liquidity needs, and earn additional income. The current assets are expected to increase by 9.4% and current liabilities to increase by 24%. Current Assets and Current Liabilities were forecasted for each year based on the historic data, and their difference representing the NWC for each year.		* Net change in working capital: Visa is managing its liquidity risk by investing excess cash in securities that enable the company to meet its working capital and liquidity needs, and earn additional income. The current assets are expected to increase by 9.4% and current liabilities to increase by 24%. Current Assets and Current Liabilities were forecasted for each year based on the historic data, and their difference representing the NWC for each year.
			[[File:Table 1- Visa Inc Unlevered Free Cash Flow .jpg\|center\|thumb\|824x824px]]
	'''WACC'''		'''WACC'''

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	* The market return (11%) is taken to be the 10-year average return of the S&P 500, where Visa is listed.		* The market return (11%) is taken to be the 10-year average return of the S&P 500, where Visa is listed.
	* The cost of debt (2.4%) is estimated as interest expense divided by total debt, as actual cost of debt was not stated in the company’s annual report.		* The cost of debt (2.4%) is estimated as interest expense divided by total debt, as actual cost of debt was not stated in the company’s annual report.
			[[File:WACC.jpg\|center\|thumb\|609x609px]]
	'''Terminal value'''		'''Terminal value'''

	The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy.		The terminal value was derived considering a long-term growth in perpetuity of 2.9%, which is based on the US expected GDP rate. I have assumed Visa remains a large stable market cap company with stable earnings and contributing to 2% of the overall growth in the US economy.
			[[File:Implied.jpg\|thumb\|487x487px]]
	Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $330m.		Based on the growth rate and the WACC rate, the present value of Terminal Value for the company was determined to be $330m.

109.75.54.55: /* Financials */

2023-08-11T07:52:19Z

Financials

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