Visa Targets Developed Economies for Growth
Preferences toward digital transactions
Business owners appear more inclined toward expanding their enterprises with the help of digitization. Business owners may find that their best options include buying into e-commerce to drive long-term profitability.
Visa’s (V) management expects the company to see long-term growth primarily on the back of developed economies. According to the company, ~$17 trillion in cash is available in the global economy.
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Visa posted an EBITDA1 margin of ~69.3% on an LTM (last-12-months) basis. Visa’s peers (XLF) PayPal (PYPL), Fidelity National Information Services (FIS), and Vantiv (VNTV) reported LTM EBITDA margins of ~20.7%, ~30.0%, and ~24.0%, respectively.
Europe and the US
As Visa (V) plans to trigger its long-term growth in developed economies, its management has a favorable outlook for Europe and the US. The company notes that in both economies, ~$7 trillion in cash is available for digitization. Visa plans to augment its growth with small transactions and by expanding its acceptance levels.
Finally, e-commerce growth could act as a tailwind for Visa’s growth. Although many consumers consider e-commerce as their preferred option, other consumers still have some resistance related to this payment method. Visa noted that is working to resolve these issues in order to unleash its growth.
- earnings before interest, tax, depreciation, and amortization ↩