Visa Operations Shine, But is V Stock a Buy at Current Valuation?

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Payments-processing juggernaut Visa Inc. V boasts robust global operations that many financial companies envy. Unlike most financial stocks, which are highly cyclical, its strong competitive advantages enable it to excel in nearly any economic environment. A cornerstone of V’s success is its focus on payment facilitation, while some peers also engage in lending. This spares the company from having to allocate capital for loan losses or credit delinquencies during economic downturns.

Over the past year, Visa’s stock has gained 18.4%. However, it has underperformed the financial transaction industry’s average growth of 21.5% and the S&P 500’s 25% return. Competitors like Mastercard Incorporated MA and American Express Company AXP have also performed better, with gains of 21% and 63.7%, respectively. These numbers reflect Visa's steady performance but also highlight the stronger momentum seen among its peers.

Visa Stock One-Year Price Performance

Zacks Investment Research
Zacks Investment Research

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Visa’s Growing Operations

Visa continues to demonstrate strong growth in payments volume and processed transactions. In fiscal 2023 and 2024, processed transactions grew 10.4% and 10%, respectively, while payments volume increased 6.4% and 6.7% year over year. These growing volumes have been key drivers of the company’s revenue growth.

In fiscal 2024, Visa reported notable year-over-year increases across key revenue segments: Service Revenues rose by 8.7%, Data Processing Revenues by 10.7%, and International Transaction Revenues by 8.8%. Growth was particularly strong in payment volumes from the CEMEA region, Europe and Latin America.

Moreover, Visa's double-digit growth in cross-border payment volume reflects the untapped potential in emerging markets, where a significant portion of the population remains underbanked. This underlines Visa’s substantial international growth opportunities.

Can Visa Capitalize on Emerging Opportunities?

Visa is well-positioned to seize growth opportunities thanks to its robust operating cash flow, which enables both organic expansion and strategic acquisitions. The company's investments and partnerships highlight its dedication to broadening its network and maintaining leadership in the payment industry. These efforts have driven consistent growth in cross-border volumes.

Visa’s focus on technological innovation further strengthens its competitive edge and positions it for long-term success in the rapidly evolving financial ecosystem. The company prioritizes advancements in digital platforms, emphasizing secure and seamless solutions like contactless payments, scan-to-pay, tap-to-pay and secure remote commerce technologies. As digital transactions surge and traditional payment methods decline, Visa is well-prepared to leverage emerging trends such as buy now, pay later, cryptocurrency and others.