V - Embedded Expectations Analysis - 2020 11 17
Visa Inc. (V:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 33.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, and although management's concerns about the economy, deal opportunities, and their growth outlook suggest the potential for near-term headwinds, given the firm's positioning and growth opportunities, market expectations are too bearish. As such, longer-term outperformance remains warrantedSpecifically, management appears concerned about the sustainability of travel recovery, the uncertainty related to stimulus payments, and continued weakness in net revenue. Furthermore, they may lack confidence in their ability to sustain their debit volumes, card-present spending, processed transactions, and client incentives. Additionally, management may be overstating the potential of their multiple digital wallet deals globally, the capabilities of their YellowPepper acquisition, and the aptitude of their Natura &Co partnership. Moreover, they may lack confidence in their ability to capitalize on accelerated opportunities due to the coronavirus, maintain their success in their consumer payments business, and regulate expenses. Additionally, they may be exaggerating the continued shift of consumers to online shopping. Finally, they may have concerns about the Department of Justice's lawsuit against them
Despite management's concerns about the global economy, deal opportunities, and their growth outlook, market expectations are too bearish. As such, longer-term outperformance remains 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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