Stephen Manning
Founder of Cash Flow University, Options Education, Public Setup/Risk/Exit Reviews
Visa still collects the toll on payment rails, with ROIC near 38% against a cost of capital near 8% and about a 4% shareholder yield. Revenue rose 14% to $11.6 billion. The line to watch is cross-border, its highest-margin revenue: volume grew 12% but related revenue only 6%, so the price per transaction is slipping, and client incentives rose to 28.7% of gross revenue, where take-rate pressure shows first. About a third of EPS growth came from buybacks. x.comÂ
Visa's volume and earnings growth show its network benefits from the global shift to digital payments. FY revenue rose 15% to $45.9B, adjusted EPS 16%, payments volume 9% and cross-border volume 13%. One of the world's highest-quality businesses, it is among the few most comfortable to hold for the next decade. Adjusted operating expenses rose 16%, ahead of revenue; client incentives rose 16% to $18.3B but threaten margins only if they get out of control. Regulation and litigation remain risks. … Show more
Visa's fiscal third quarter backs the case for an attractive risk/reward made at 21x earnings. Net revenue of $11.6 billion beat the $11.39 billion expected and rose 14%, while adjusted EPS of $3.32 beat $3.23 and rose 11%. Cross-border volume grew 13% and data processing revenue 17%. x.comÂ
Visa's roughly 30x earnings multiple and $750 billion valuation leave less upside than other opportunities, even if it keeps executing; the best case may be another doubling over a few years. Its once-impenetrable moat may look different in five years, while its reputation as a safe compounder is already priced in. This is a relative judgment, not a prediction that Visa cannot keep rising. x.com x.com x.com x.com x.comÂ
Visa's re-accelerating cross-border volume growth, combined with its current valuation, sets up potential for a rally. x.com x.comÂ
Visa is a clockwork compounder worth simply holding. It beat on every metric: adjusted EPS of $3.32 versus $3.23 expected, sales of $11.633B versus $11.388B, and 71.7B processed transactions versus 71.17B. x.com x.comÂ
Visa could move lower if higher expenses keep compressing margins into Q4. Q3 beat on adjusted EPS ($3.32 vs $2.98 expected), net revenue (+14% to $11.6 billion) and payments volume (+10%), but operating expenses rose 19% to $4.76 billion against $4.0 billion expected. Q4 guidance calls for low-double-digit expense growth versus 8% expected and EPS growth at the low end of mid-teens versus 16%. It could drop like American Express last week if the call confirms margin compression continues. x.comÂ
Visa is a quality compounder whose stock has lagged its earnings. Over the last decade it grew EPS at more than twice the rate of its transaction volume. Over the past five years, EPS rose 138% while market cap rose only 40%, a big discrepancy for one of the greatest businesses on the planet. x.com x.com x.comÂ
Visa is an underrated stock to simply own and sit on, without needing to read the filings, listen to calls or watch moving averages. x.comÂ
Visa's pricing power and duopoly are in trouble as merchants resist 3%+ interchange fees and new ways to shop emerge. If Visa loses the CCCA fight, its entire moat is at stake: opening rails to another network would be a big push toward stablecoins, with agent commerce an even greater push. Australia's fee cut adds global pressure. China's opening is positive but incremental and years away if China follows through, amid domestic competition. x.comÂ
Visa trades near 10-year-low valuation multiples even as one of the world's top investors holds 20% of his portfolio in it and bought more last quarter. x.comÂ
