Visa (V:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Visa(V:NYS)

Financial Services:Credit Services

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$135.91 (USD) 27/11/2018

Weighted Valuation
$140.23 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 3.2%

Valuation Models Analyst Consensus: $159.14 (USD)
(in order of importance) Adjusted Book Value: $104.57 (USD)
Comparables: $154.79 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (V:NYS USD)

Price 135.91
Range 134.12 – 136.31
52 week 107.43 – 150.79
Open 135.28
Vol / Avg. 7.87M/9.98M
Mkt cap 309.17B
P/E 30.75
Div/yield 0.83/0.01
EPS 4.42
Shares 2.21B
Beta 1.12

Company Description

Visa manages payment brands and an electronic global payment network that connects thousands of financial institutions in more than 200 countries. The network provides authorization, clearing, and settlement of electronic payment transactions. It uses a four-party model that includes card-issuing banks, merchant acquirers, and merchants (in addition to the network itself) within its payment ecosystem. The firm generates revenue by charging fees to its customers based on both the dollar volume of card activity and the number of transactions processed through the network. In addition to transaction processing services, Visa offers other payment-related products, including digital wallets, tokenization, and risk management services.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for V:NYS

Using a discounted cash flow model we generated an intrinsic value of $81.18 (USD) for V:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

V:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $81.18 1% 5% 1% 5%
WACC (or Ke) 8.67 $100.97 $67.33
Terminal Growth Rate 3.00 $68.55 $99.22
Tax Rate 0.20 $88.35 $74.02
Cash Flow 20,193,871,000 $75.30 $87.06
Capital Expenditures -575,800,000 $81.03 $81.34
Long Term Debt 15,882,000,000 $81.54 $80.82

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $154.79 (USD) for V:NYS. We also generated a valuation of $94.85 (USD) using other metrics and comparables.
The comparable companies were American Express (AXP:NYS), Mastercard (MA:NYS) and PayPal Holdings (PYPL:NAS).

Company V:NYS End Date Value
Earnings/Share $4.42 (USD)
Book Value/Share $12.57 (USD)
Sales/Share $8.54 (USD)
Cash Flow/Share $5.11 (USD)
EBITDA/Share $6.02 (USD)
Price Based on Comps Adjustment Factor (%)
$166.32 (USD) 42.6
$192.77 (USD) 19.5
$70.10 (USD) 0.0
$97.92 (USD) 0.0
$155.05 (USD) -11.2
V:NYS Ratios Used Average Values AXP:NYS MA:NYS PYPL:NAS
33.70 PE Ratio 37.63 24.29 39.93 48.66
10.97 PB Ratio 15.33 4.09 35.35 6.56
16.14 PS Ratio 8.21 3.40 14.40 6.82
26.97 PCF Ratio 20.55 5.85 31.52 24.28
23.93 EV to EBITDA 25.74 0.00 24.89 26.58

Multiples

Using a multiples approach we generated a valuation of  $123.74 (USD) for V:NYS

Company V:NYS End Date Value
Earnings/Share $4.42 (USD)
Book Value/Share $12.57 (USD)
Sales/Share $8.54 (USD)
Cash Flow/Share $5.11 (USD)
EBITDA/Share $6.02 (USD)
Price Based on Comps Adjustment Factor
$145.19 (USD) 0
$87.28 (USD) 0
$115.14 (USD) 0
$147.26 (USD) 0
$123.84 (USD) 0
Ratios Ratio Average
PE Ratio 32.85
PB Ratio 6.94
PS Ratio 13.48
PCF Ratio 28.81
EV to EBITDA 20.56

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  V:NYS for the last 10 years was  6.81

We ran the Adjusted Book Value for  V:NYS and generated a book value of  $15.35 (USD)
By multiplying these we get an adjusted valuation of  $104.57 (USD)

Analyst Data

In the Stockcalc database there are 7 analysts that provide a valuation for V:NYS. The 7 analysts have a concensus valuation for V:NYS for 2019 of $159.14 (USD).

V:NYS Visa

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
7 2 0 4.5556 Buy 2018-11-26

Current Price: 135.91 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 5.31 6.12 6.93
# EPS Analysts 9 4 2
Mean Revenue 22,753.10 25,201.90 27,763.40
# Revenue Analysts 5 3 2
Mean Target Price 159.14
Mean Cash Flow 6.36 8.36 9.54
Mean EBITDA 16,088.20 17,888.70 19,605.70
Mean Net Income 12,021.00 13,543.60 14,930.20
Mean Debt Outstanding 17,930.00 17,930.00 17,930.00
Mean Tax Rate 20.10 20.00 20.00
Mean Growth Rate 18.92
Mean Capital Expenditure 781.00 728.10 799.60

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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