Critical Analysis: Visa (V) and Its Rivals

Visa (NYSE:V) is one of 342 public companies in the “Financial Services” industry, but how does it contrast to its competitors? We will compare Visa to similar companies based on the strength of its risk, institutional ownership, analyst recommendations, dividends, earnings, profitability and valuation.

Earnings and Valuation

This table compares Visa and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Visa	$45.90 billion	$20.06 billion	33.55
Visa Competitors	$6.32 billion	$1.07 billion	8.38

Visa has higher revenue and earnings than its competitors. Visa is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Institutional and Insider Ownership

82.2% of Visa shares are owned by institutional investors. Comparatively, 43.0% of shares of all “Financial Services” companies are owned by institutional investors. 0.1% of Visa shares are owned by company insiders. Comparatively, 21.9% of shares of all “Financial Services” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Visa and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Visa	51.20%	70.50%	26.59%
Visa Competitors	-409.62%	-15.98%	-6.09%

Dividends

Visa pays an annual dividend of $2.68 per share and has a dividend yield of 0.6%. Visa pays out 21.7% of its earnings in the form of a dividend. As a group, “Financial Services” companies pay a dividend yield of 4.2% and pay out -88.3% of their earnings in the form of a dividend. Visa has raised its dividend for 17 consecutive years. Visa lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Risk & Volatility

Visa has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Visa’s competitors have a beta of 2.49, meaning that their average share price is 149% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Visa and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Visa	0	0	35	2	3.05
Visa Competitors	1970	6870	11619	443	2.50

Visa presently has a consensus price target of $438.41, suggesting a potential upside of 5.98%. As a group, “Financial Services” companies have a potential downside of 1.58%. Given Visa’s stronger consensus rating and higher possible upside, analysts plainly believe Visa is more favorable than its competitors.

Summary

Visa beats its competitors on 11 of the 15 factors compared.

Visa Company Profile

Visa Inc. operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services. The company also provides acceptance solutions, which include Cybersource that provides modular and value-added services for connecting merchants to payment processing; risk and identity solutions, such as Visa Advanced Authorization, Visa Secure, Visa Risk and Decision Manager, Visa Consumer Authentication Service, and payment-decisioning solutions for fraud prevention; and Visa Consulting and Analytics, a payment consulting advisory services. It provides its services under the Visa, Visa Electron, Interlink, V PAY, and PLUS brand names. The company serves merchants, financial institutions, and government entities. Visa Inc. was founded in 1958 and is headquartered in San Francisco, California.