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A Look at Visa’s Valuation

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Updated

Price-to-book ratios

Visa’s (V) NTM (next-12-month) and LTM (last-12-month) price-to-book ratios are 7.6x and 8.9x, respectively. Peers’ average NTM ratio is 8.2x. Peers’ (IYF) NTM and LTM price-to-book ratios are as follows:

  • Mastercard (MA): 21.5x and 36.6x
  • Discover Financial Services (DFS): 2.2x and 2.4x
  • Capital One Financial (COF): 0.92x and 0.95x

 

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Brighter outlook

In fiscal Q3 2018, Visa expects its volumes to grow due to higher consumer spending, which could boost its valuation. As we’ve discussed, Visa’s efforts towards introducing contactless payments in more US markets could pay off in the long term. It has a favorable outlook on its campaign to create awareness of contactless payments in the United States and expects it to bring substantial growth.

In fiscal Q2 2018, the company’s processed transaction count rose 12% year-over-year. Over the long term, the company plans to penetrate Europe, where a significant volume growth opportunity awaits as many payments are still made using cash.

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