To The Moon

On Thu, 04 May - I lamented in my post (click here to read, give a “Like”) the difficulties to invest in the different sectors, based on current landscape.

On Fri, 05 May - I followed up with another post (click here to read, give a “Like”) to re-assess US banks (international ones) as mid to long term investment.

Today Tue, 09 May - I am further extending my outlook on Banking sector by considering $Visa(V)$ as another alternatives.

For a more complete assessment, I refer to my previous post on $Visa(V)$ Q1 2023 earnings posted on 01 Feb 2023 (click here to read).

Is it as “rosy” a picture of healthy returns as reported or is there more to it that meets the eye?

To make sense of latest earnings, I will be making apple-to-apple comparisons.

This makes it easier to know at a glance whether Visa has really improved in its earnings - YoY or from last quarter.

Visa Inc - Summary

• Revenue came in at $8.0 Billion that is a +11.0% gain YoY. Its Q1 2023 revenue was $7.9 Billion.

• GAAP Net Earnings was $4.3 Billion; that is a +17% gain YoY. Its Q1 2023 earnings was $4.2 Billion.

• GAAP Earnings per share (EPS) was $2.03; that is a +20% gain YoY. Its Q1 2023 EPS was $1.99.

• Non GAAP EPS was $2.09; that is a +17% gain YoY. However, its Q1 2023 non GAAP EPS was $2.18

Visa Inc - Segment revenue contributions

At first glance, Visa’s 4 major segments (Service, Data processing, international transaction & Others) all improved their revenue intake YoY.

If comparison between Visa’s Q2 2023 and Q1 2023 is carried out, there is an so slight a shift in each business segments’ contribution towards Visa’s total revenue

1. Service’s contribution has increased to 34.6% from 32.7% (Q1 2023), up by +1.9%.

2. Data processing’s contribution has declined to 35.1% from 35.7%, down by -0.6%.

3. International transaction’s contribution has declined to 25.2% from 26.1%, down by -0.9%.

4. Others’ contribution has declined to 5.1% from 5.5%; down by -0.4%

Visa Inc - operations data

Based on YoY comparison, both “Total volume” and “Payment volume” have improved by +5% and +6% respectively.

However if comparison is carried out between Q2 2023 and Q1 2023’s “Total volume” and “Payment volume”, there is a slight dipped.

• Total volume has decreased to 3.55 Trillion from 3.63 Trillion (Q1 2023) by -2.2%.

• Payment volume has decreased to 2.96 Trillion from 3.0 Trillion (Q1 2023) by -1.33%

By selecting the Top 3 geographical regions to compare : (amount in billions)

1. US. Total volume ($1,619 vs $1,673) - fell. Payment volume ($1,471 vs $1,523) - fell.

2. Europe. Total volume ($656 vs $666) - fell. Payment volume ($540 vs $546) - fell.

3. Asia Pacific. Total volume ($593 vs $586) - rise. Payment volume ($512 vs $505) - rise.

• Payments transactions. For current quarter it stood at $60.94 Billion vs $63.2 Billion (Q1 2023).

• Processed transactions. For current quarter, its $50.07 Billion vs $52.5 Billion (Q1 2023).

• Cross Border volume growth. Registered a +19% growth vs +11% growth (Q1 2023).

• GAAP operating expenses. It has increased by +11% to $2.65 Billion vs +25% to 2.8 Billion (Q1 2023). Although there is a slight fall in expenses.

Share Re-purchase.

It was reported that for accounting period ended 31 Mar 2023, Visa had repurchased 10.0 Million shares of class A common stock at an average cost of $222.09 per share for a total outlay of $2.2 Billion.

Visa Inc still have $11.8 Billion of remaining authorized funds for share repurchase as end 31 Mar 2023 at its discretion.

Investors who like to look at technical data to determine whether there is still opportunity to buy into Visa Inc now could take a look at the below tabulations (note : this is not a recommendation to trade in Visa shares; just info sharing).

My Impression Of Visa Inc Performance :

1. When comparison is made between Visa Inc’s Q2 2023 earnings vs its Q2 2022 (YoY), it has improved on its set of earnings reported.

2. However if comparison is made between Visa Inc’s Q2 2023 vs Q1 2023, it is obvious that earnings have fallen “short” in some of the measuring factors.

3. The conclusion is maybe both US and World economies are slowing down in stealth mode.

Visa Inc - stock price as of 28 Apr 2023

• Visa’s share price hit rock bottom on 30 Sep 2022 at $177.65.

• Its last closing price on 28 Apr 2023 was $232.73; a whooping +31% gain since end Sep 2022.

• It should be facing resistance from its Fri closing price based on an impending 0.25% interest hike coming into enforcement by Wed, 03 May 2023.

• Similarly, if US economy were to slip into mild recession by H2 2023, it is likely that Visa Inc will be somewhat affected - given that US contributes the lion’s share in Visa’s Operating Statistic (refer to above data table).

• Having said that, it should fare “better” than US banks as Visa’s revenue stream more global and internationalised.

• At $232 per share, it is not exactly a “bargain” now.

• Instead of jumping, I would adopt a “wait & see” stance to see if there would be a better entrance opportunity in about 2 months time.

• Do you think the US economy will slip into recession anytime soon or in H2 2023 ?

• Do you think now is a “good” time to buy into Visa ?

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