V - Embedded Expectations Analysis - 2020 04 16
ï€ Visa Inc. (V:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 30.4x Uniform P/E. At these levels, the market has somewhat modest expectations for the firm, and although management's concerns about growth, costs, and COVID-19-related headwinds imply the potential for near-term headwinds, given the firm's positioning and growth opportunities, market expectations for profitability levels to remain near current levels are too bearish. As such, long-term outperformance is likely warrantedï€ Specifically, management may lack confidence in their ability to minimize client incentive, personnel and marketing expenses, grow their core payments business, and maintain current payments volume and processed transactions. Moreover, they may have concerns about the impact of COVID-19 on spending and the sustainability of their New York MTA taps volume, and they may be exaggerating the power of Plaid's network
ï€ Despite management's concerns about their growth, costs, and COVID-related headwinds, given the firm's oligopolistic positioning and digital solutions growth opportunities, market expectations for profitability levels to remain near current levels are too bearish. As such, longer-term outperformance is likely warranted for V
Visa is engaged in digital payments. The company facilitates payments between consumers and businesses. The company is focused on its proprietary network, VisaNet, to provide products and services. The company provides a portfolio of business payment solutions, including small business, corporate (travel) cards, purchasing cards, virtual cards/digital credentials, non-card cross-border business-to-business payment options and disbursement accounts, covering various main industry segments around the world. The company also provides several capabilities and services, including fraud prevention and security, processing, loyalty, merchant and digital solutions, consulting and data solutions.
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