Is Visa Inc (NYSE:V) A Reliable Total Return Investment?
Visa Inc (NYSE:V) has had a good run ever since the merger of Visa International, Visa Canada, Inovant and Visa USA back in 2007. The company’s total return in the past five years has exceeded the Dow’s return, which leads to the question as to whether the company’s total return shall continue to outperform the Dow.
Visa has recorded an excellent total return over the past five years.
The trend towards a cashless society favors the company.
The company is a market leader with significant earnings growth potential.
Visa is the largest electronic payments processor in the world with one of the most recognizable brands globally given that it operates in over 200 countries. The company has had a very good year and is up about 40% in 2017; the company’s stock price is up over 200% in the last five years and it seems like Visa’s rally is far from over.
The company faces stiff competition within the electronic payments industry from Mastercard Inc (NYSE:MA) and American Express Company (NYSE:AXP). However, Visa’s main advantage is that it is the largest and most recognizable brand, which forms a competitive moat against its competitors.
Current trends towards a cashless society are also working in Visa’s favor as more consumers and merchants choose to use credit and debit cards instead of cash. The company stands to benefit significantly from this ongoing transformation into a cashless society into the future.
Given its position as an industry leader, Visa was able to win the Costco Wholesale Corporation (NASDAQ:COST) co-branding deal from American Express, which was a big win for the company. This win affirmed the company’s dominant position in the payments technology industry, which also indicates that Visa might be a better investment as compared to American Express.
An analysis of the company’s competitors indicates that Visa currently trades at a P/E ratio of 40, while MasterCard’s P/E ratio is 36.11 and American Express is the cheapest at 17.77. Visa’s current dividend yield is 0.65%, which much lower than MasterCard’s 1.56%, but Visa’s rate of earnings growth dwarfs MasterCard’s as its average over the past five years is 24.5%, while MasterCard’s was barely 0.5%.
Visa’s total return over the past five years exceeds 200% and this trend is likely to continue given the advantages the company has as an industry leader. To find out more about where we believe this stock is going to go ahead of earnings, download our free custom trading report on the stock.
Stock Traders Daily provides real time trading reports that allow you to understand where we think specific stocks are going to go in the future. Subscribing as a free trial member will grant you access to over 1300 real time stock trading reports.