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Visa: 2018 Expectations and a Must-Read Recap

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Past performance

Visa (V) recorded strong fiscal 2017 with the help of positive momentum in cross-border volumes as well as payments volumes. However, Visa Europe—along with the positive momentum in processed transactions—also contributed to the strong performance in fiscal 2017. In fiscal 2018, the company is expected to experience strong growth. It continues to focus on providing significant shareholder value.

In fiscal 2018, Visa is expected to benefit from the rate increases by the Federal Reserve as well as the new US tax law. Plus, the positive momentum in the US economy would also fuel Visa’s growth.

The enterprise value-to-revenue ratio for consumer financial companies (XLF) Discover Financial Services (DFS), Visa (V), Mastercard (MA), and American Express (AXP) stood at 4.34x, 15.10x, 14.47x, and 6.01x, respectively, on an LTM (last-12-month) basis.

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Shift in consumers’ preferences, new tax law

Visa has been exceeding analysts’ estimates for EPS from the past few quarters, which has helped the company create a positive image in market participants’ eyes. Moreover, the new US tax law is expected to help the company in terms of building opportunities for investments. Plus, another factor helping the company is the replacement of physical payment methods with digital methods.

According to Visa’s management, the company is analyzing various options that could help with growth, and the priority would be investments that could drive value in the long term. The company is maintaining its focus on benefiting employees.

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