Posts tagged " VISA "

Visa Inc Class A (V) Extended Graph Analysis

July 2nd, 2020 Posted by Extended Analysis No Comment yet

Company Profile

VISA logo

Visa Inc Class A (NYSE:V) is a payment technology company operating globally that allows consumers, businesses, banks and governments to use digital currency. The company introduced the electronic payment system over 60 years ago. There are more than 3 billion Visa accounts worldwide in more than 200 countries and regions. In 2019 there were 200 billion payments and cash transactions that were counting with the Visa card, and there were 11 trillion in payments and cash volumes. It uses artificial intelligent technology that analyses every detail of transactions. Visa network is made up of Fiber, Internet, Wireless and Virtual Connections that tie-up consumers, businesses, governments and financial institutions.

The company was founded in 1958 as BankAmericard by Dee Hock, and in 1976 BankAmericard became VISA. Headquartered in Foster City, California, USA.

 

Visa Inc Class A (V) Extended Graph Analysis

 

1. V Cash Flow

V CASH FLOW

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 6,584,000,000 5,574,000,000 9,208,000,000 12,713,000,000 12,784,000,000 12,768,000,000
Net cash used for investing activities -1,435,000,000 -10,916,000,000 735,000,000 -3,084,000,000 -591,000,000 2,246,000,000
Net cash provided by (used for) financing activities -3,603,000,000 7,477,000,000 -5,924,000,000 -11,240,000,000 -12,061,000,000 -12,462,000,000
Capital expenditure -414,000,000 -523,000,000 -707,000,000 -718,000,000 756,000,000 -850,000,000
Free cash flow 6,170,000,000 5,051,000,000 8,501,000,000 11,995,000,000 12,028,000,000 11,918,000,000
Working Capital 5,518,000,000 6,267,000,000 9,029,000,000 6,911,000,000 7,555,000,000 7,555,000,000

Facts:

  • Net cash from operations was $12.8 billion in 2020 trailing twelve months.
  • Net cash from investing was $2.45 billion in 2020 in trailing twelve months.
  • Cash provided by (used for) financing activities was $-12.46 billion in 2020 in trailing twelve months.
  • Capital expenditures were $-850 million in 2020 trailing twelve months.
  • Free cash flow was $11.92 billion in 2020 in trailing twelve months.
  • Working capital was $7.56 billion in 2020 in trailing twelve months.

Explanation

  • Cash from operations increased year-over-year due to increases in net income. 
  • Cash from operations grew 94 percent in five years.
  • Cash used for investing activities were sales/maturities of investments, investment in property, plant and equipment, acquisitions and purchases of investments.
  • Net cash provided by (used for) financing activities were common stock repurchased, dividends paid and other financing activities.
  • Capital expenditures were investment in property, plant and equipment.
  • Free cash flow increases year over year and has a growth of 93 percent in five years.
  • Working capital grew 37 percent in five years.

Interpretation

The company has the capability of providing cash from operations year-over-year by providing a sufficient net income.

 

2. V BALANCE SHEET

V BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 6,015,000,000 8,938,000,000 13,438,000,000 11,709,000,000 12,074,000,000
Current Assets 10,892,000,000 14,313,000,000 19,023,000,000 18,216,000,000 20,970,000,000
Net property, plant and equipment 1,888,000,000 2,150,000,000 2,253,000,000 2,472,000,000 2,695,000,000
Total non-current assets 29,344,000,000 49,722,000,000 48,954,000,000 51,009,000,000 51,604,000,000
Total assets 40,236,000,000 64,035,000,000 67,977,000,000 69,225,000,000 72,574,000,000
Current liabilities 5,374,000,000 8,046,000,000 9,994,000,000 11,305,000,000 13,415,000,000
Non-current liabilities 5,020,000,000 23,077,000,000 25,223,000,000 23,914,000,000 24,475,000,000
Total liabilities 10,394,000,000 31,123,000,000 35,217,000,000 35,219,000,000 37,890,000,000
Retained earnings 11,843,000,000 10,462,000,000 9,508,000,000 11,318,000,000 13,502,000,000
Stockholders equity 29,842,000,000 32,912,000,000 32,760,000,000 34,006,000,000 34,684,000,000

Facts

  • Total cash was $12.07 billion in 2019.
  • Current assets were $20.97 billion in 2019.
  • Net property, plant and equipment was $2.7 billion in 2019.
  • Non-current assets were $51.6 billion in 2019.
  • Total assets were $72.57 billion in 2019.
  • Current liabilities were $13.42 billion in 2019.
  • Non-current liabilities were $24.48 billion in 2019
  • Total liabilities were $37.89 billion in 2019.
  • Retained earnings were $13.5 billion in 2019.
  • Stockholders equity was $34.68 billion in 2019.

Explanation

  • Total cash has increased 52 percent in five years although it has an erratic movement.
  • Total cash represents 17 percent of the total assets.
  • Current assets grew 93 percent in five years and it represents 29 percent of the total assets.
  • Net property, plant and equipment increased year-over-year and it grew 43 percent in five years. It represents 4 percent of the total assets.
  • Non-current assets grew 76 percent in five years and it represents 71 percent of the total assets.
  • Total assets increased year-over-year and it has a growth of 80 percent in five years.
  • Current liabilities represent 35 percent of total liabilities.
  • Non-current liabilities represent 65 percent of total liabilities.
  • Total liabilities represent 52 percent of total liabilities and shareholders equity.
  • Retained earnings was 39 percent of total equity.
  • Shareholders equity represents 48 percent of total liabilities and shareholders equity.

Interpretation

The balance sheet of Visa Inc was healthy and the company is liquid. The company has the ability to pay its current obligations in due time. The company is using both investors and creditors money at 48 and 52 percent, respectively in its business operations.

 

3. V INCOME AND MARKET

V INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 13,880,000,000 15,082,000,000 18,358,000,000 20,609,000,000 22,977,000,000 23,885,000,000
EBIT 9,078,000,000 9,762,000,000 12,163,000,000 13,561,000,000 15,401,000,000 15,962,000,000
Net Income 6,328,000,000 5,991,000,000 6,699,000,000 10,301,000,000 12,080,000,000 12,482,000,000
EBITDA 9,572,000,000 8,941,000,000 12,813,000,000 14,031,000,000 18,057,000,000 16,552,000,000
Market Capitalization 186,088,000,000 186,817,000,000 266,145,000,000 299,355,000,000 416,792,000,000 428,863,000,000
Intrinsic Value 234,104,000,000 232,119,000,000 388,515,000,000 410,963,000,000 594,397,000,000 540,593,000,000

Facts:

  • Revenue was $24 billion in 2020 trailing twelve months.
  • EBIT was $16 billion in 2020 trailing twelve months.
  • Net income was $12.5 in 2020 trailing twelve months.
  • EBITDA was $17 billion in 2020 trailing twelve months.
  • Market Capitalization was $428.88 billion in 2020 trailing twelve months.
  • Intrinsic value was $540.59 billion in 2020 trailing twelve months.

Explanation

  • The revenue increased year-over-year and it grew 72 percent in five years.
  • EBIT increases year-over-year and it grew 76 percent in five years.
  • EBIT is 67 percent of revenue.
  • Net income grew 97 percent in 5 years and increases year-over-year. 
  • Net income represented 52 percent of revenue.
  • EBITDA increases year-over-year and it grew 73 percent in five years.
  • EBITDA represented 59 percent of the total revenue.
  • Market capitalization increased year-over-year and it grew 130 percent in five years.
  • Intrinsic value was greater by 26 percent compared to the market capitalization.

Interpretation

The company is profitable and financially healthy. The management has the ability to produce sufficient revenue for the operation of the business and it showed in the last five years. Moreover, net margin was 52 percent,  In other words, the management has the ability and efficiency to earn an impressive profit. The stock price of VISA is undervalued by 26 percent.

 

4. V FINANCIAL RATIOS

V FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 0.35 0.29 0.28 0.30 0.32 0.33
Return on assets % 16.02 11.37 9.80 14.49 17.04 17.50
Return on equity % 22.05 20.79 23.76 35.65 41.83 43.09
Return on invested capital % 22.05 14.07 15.05 23.44 26.52 25.88
Debt/Equity 0.00 0.58 0.61 0.58 0.57 0.47

Facts:

  • Asset turnover was averaging 0.33 ratio in 2020 trailing twelve months.
  • Return on assets was 17.5 percent in 2020 trailing twelve months.
  • Return on equity was 43.09 percent in 2020 trailing twelve months.
  • Return on invested capital was 25.88 percent in 2020 trailing twelve months.
  • Debt/Equity ratio was 0.47 in 2020 trailing twelve months.

Explanation

  • Asset turnover ratio indicates that for every dollar of assets it generated 33 cents of sales.
  • Return on assets indicates that the company is generating $0.175 for every dollar invested in assets.
  • Return on equity indicates that for every dollar in shareholders equity it generated $0.43 in net profit.
  • Return on invested capital indicates that the company made $0.43 for every dollar invested in capital.
  • Debt/Equity ratio indicates that for every dollar in equity, the company has 47 cents in leverage.

Interpretation

The company is in good standing and financial health. The company was able to generate a good return on its investments.

 

5. V KEY EXECUTIVE COMPENSATION

V KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Salary 2,047,674 2,350,090 4,100,912 4,775,172 4,875,220
Bonus 6,875,000 3,125,000 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 10,947,425 9,353,088 25,802,382 31,198,595 38,432,445
Securities Options 1,800,260 4,104,755 7,894,994 108,750,019 10,425,006
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 3,842,153 3,344,438 16,112,600 17,954,467 12,213,725
Other Compensation 1,015,585 165,776 152,428 115,916 139,486
Total 26,571,982 22,489,867 54,071,010 64,927,046 66,094,540
Alfred F. Kelly Jr., Chairman and CEO
Salary 1,150,799 1,300,038 1,400,059
Bonus 0 0 0
Annual Other Income 0 0 0
Restricted Stock Award 11,883,298 8,693,984 14,246,423
Securities Options 2,749,995 3,500,008 4,312,489
LTIP Payout 0 0 0
Non-Equity Compensation 5,875,000 5,973,500 4,270,000
Other Compensation 75,362 26,416 36,800
Total 21,734,454 19,493,946 24,265,771
Vasant M. Prabhu, Vice Chairman and CFO
Salary 547,616 850,032 850,032 1,000,038 1,000,040
Bonus 6,875,000 3,125,000 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 7,500,041 1,757,160 3,017,648 5,848,193 6,493,501
Securities Options 0 1,031,255 1,387,503 1,999,994 1,625,005
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,081,253 1,230,375 3,221,500 3,704,000 2,440,000
Other Compensation 979,180 124,626 16,200 16,500 26,800
Total 16,997,563 8,134,100 8,494,072 12,569,940 11,586,718
Ryan Mcinerney, President
Salary 750,029 750,029 750,029 900,035 900,047
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 1,951,504 3,984,063 4,363,957 6,777,537 7,133,141
Securities Options 928,242 1,476,498 1,437,500 2,250,003 1,825,008
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,498,275 10,153,125 2,842,500 3,333,600 2,196,000
Other Compensation 20,505 22,550 20,066 21,500 30,621
Total 5,163,379 7,401,817 9,417,311 13,286,026 12,088,417
Rajat Taneja, President Technology
Salary 750,029 750,029 750,029 900,035 900,047
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 1,495,880 3,611,865 4,575,318 6+803356 6,977,836
Securities Options 872,018 1,597,002 1,549,999 2,125,007 1,712,503
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,262,625 960,938 2,820,000 3,306,600 2,196,000
Other Compensation 15,900 18,600 17,450 17,750 22,215
Total 4,411,040 6,953,950 9,714,526 13,154,517 11,810,570
Kelly Mahon Tullier, EVP, General Counsel and corporate Secretary
Salary 600,023 675,026 675,027
Bonus 0 0 0
Annual Other Income 0 0 0
Restricted Stock Award 19,662,161 3,075,525 3,581,544
Securities Options 769,997 999,997 950,001
LTIP Payout 0 0 0
Non-Equity Compensation 1,353,600 1,636,767 1,111,725
Other Compensation 23,350 33,750 23,050
Total 4,710,647 6,422,617 6,343,064

Facts:

  • The key executive compensation in 2015 was $26,572,000.
  • Key executive compensation in 2016 was $22,490,000.
  • Key executive compensation in 2017 was $54,071,000.
  • Executive compensation in 2018 was $64,927,000.
  • The key executive compensation in 20149 was $66,095,000.

Explanation

  • The total key executive compensation represents 0.53 percent of the net income.
  • Total compensation of Alfred F. Kelly, CEO represented 37 percent of the total key executive compensation.
  • Total compensation of Vasant M. Prabhu, CFO represents 18 percent of the total key executive compensation.
  • Compensation of Ryan Mcinemey, President was 18 percent of the total key executive compensation.
  • Compensation of Rajat Taneja, President Technology was 18 percent of total key executive compensation.
  • The total compensation of Kelly Mahon Tullier, EVP, General Counsel and corporate Secretary represents 10 percent of the total key executive compensation.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation and other compensation.

 

 

6. V LOBBYING AND CONTRIBUTIONS

V LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
1998 $3,550,000
1999 $2,410,000
2000 $2,269,000
2001 $2,232,276
2002 $3,126,476
2003 $3,079,441
2004 $2,935,545
2005 $3,927,059
2006 $4,909,687
2007 $5,340,000
2008 $4,810,000
2009 $6,010,000
2010 $5,430,000
2011 $6,880,000
2012 $5,550,000
2013 $5,210,000
2014 $4,310,000
2015 $3,840,000
2016 $3,800,000
2017 $3,750,000
2018 $3,740,000
2019 $3,760,000
2020 $860,000

Facts:

Since 1998 to the current date, Visa Inc Class A is incurring lobbying and contributions expenditure to politicians. The annual record shows above.

Explanation

A note from OpenSecret.org Center for Responsive Politics, quoted below:

“NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on April 22, 2020 and includes spending from January 1 – March 31. Prior years include spending from January through December.”

Interpretation

Lobbying and contributions to politicians vary every cycle; it may increase or decrease in amount depending on the attention given by the federal government on the issues of the company.

 

7. V FINANCIAL STRENGTH

V FINANCIAL STRENGTH

DATA

Working Capital $7,555,000,000
Total Assets $72,574,000,000
Sales $23,885,000,000
EBIT $15,962,000,000
Market value of equity $409,197,500,000
Book value of total liabilities $37,890,000,000
Retained earnings $13,502,000,000

 

CALCULATIONS

Ratio Score Result
A – Working Capital / Total Assets 0.10 1.20 0.12
B – Retained Earnings / Total Assets 0.19 1.40 0.26
C – EBIT / Total Assets 0.22 3.30 0.73
D – Market Value of Equity / Book Value of Total Liabilities 10.80 0.60 6.48
E – Sales / Total Assets 0.33 1.00 0.33
Z-Score 7.92

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The Z-Score of Visa Inc Class A was calculated at 7.92 score. It indicates that the company is very far in declaring bankruptcy in near future or in other terms, the company is not close to insolvency according to Dr. Altman’s grading scale. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency. Visa Inc has a strong financial health.

Overview

VISA Inc. Class A is financially healthy and stable. The profit and loss account shows that the company is profitable, which represents that the management is capable of producing a net income of half of the total revenue. Moreover, the stock price of VISA Inc is undervalued, in other words, the stock price is below the fair market value, moreover, per calculation there is a margin of safety in buying the stocks of VISA Inc Class A.

CITATION

https://www.morningstar.com/stocks/xnys/v/quote

https://investor.visa.com/

https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2020&id=D000029689

Researched and written by Criselda

Note:

Research Reports can be found under the company tab.