To The Moon

My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?

To that I asked, "why not both" ?

Wouldn't that have more upsides comparatively speaking ?

Having covered a handful of US banks and some Non-bank companies; I am keen to take this analysis with another Credit Card company for a spin.

Let's look at $Visa(V)$ , its Q4 2022 earnings and see if it still fits the bill.

Sidetrack: Below is what I have covered; to test out this theory.

• $MasterCard(MA)$ - Click here to read. Like the post ok. Tks.
• Intel - Click here  to read. Like the post ok. Tks.
• $Microsoft(MSFT)$  - Click here to read. Like the post ok. Tks.
• Netflix - Click here to read. Like the post ok. Tks.
• Goldman Sachs - Click here  to read. Like the post ok. Tks.
• $Morgan Stanley(MS)$  - Click here to read. Like the post ok. Tks.
• BlackRock - Click here to read.

• An American multi national financial services corporation
• It is the largest payment-processing corporation worldwide
• It is one of the world's most valuable companies.
• It was founded in 18 Sep 1958 (64 years ago) by Dee Ward Hock
• Originally it was known as BankAmericard as it was formed by Bank of America
• However as it grew and grew, the bank decided to spin off BankAmericard program, forming a consortium with the other various BankAmericard issuer banks.
• In 1976, BankAmericard was renamed as "Visa"; where the brand remains until present.
• Own the largest major payment network, widely accepted by over 40 Million merchants.

In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Financial Services Visa Inc fare ?

Current stock price > 31 Jan 2022 stock price by +2.33% - Impressive !

Visa Inc - Summary

• Total revenue came in at $7.9 Billion vs $7.1 Billion (Q1 2022); a +11.27% gain (QoQ)
• Net earnings (GAAP) came in at $4.2 Billion vs $3.96 Billion (Q1 2022); a +6.06% gain (QoQ).
• Earnings per share (GAAP) was $1.99 vs $1.83 (Q1 2022); a +8.74% gain (QoQ)
• Earnings per share (Non GAAP) was $2.18 vs $1.81 (Q1 2022); a +20.44% (QoQ)

Visa Inc - Revenue by Segment

• Above diagram breaks down Total Revenue based on different Business Segments and its gain/loss contribution
• Looking at the Pie chart, it could be inferred that (a) Data Processing [payment volumes] contributes most at 35.7% to the top line; followed by (b) Service [processed transactions] at 32.7%, (c) International transactions [cross border volume] at 26.1% and (d) Others [cross border volumes excluding intra-Europe] at 5.5%.

Visa inc - Operations Highlights

• Glossary : (1) Total volume is the sum of payments volume & cash volume. (2) Payments volume is the aggregate dollar amount of purchases made with cards & other form factors carrying the Visa, Visa Electron, V PAY and Interlink brands; excluding Europe co-badged volume.
• If you study the above table carefully, you will realized that Visa's Total volume remained "flat" last year.
• This could be attributed to the worldwide pandemic lockdown; exercised by respective countries in a bid to curtail the spread of the covid virus.
• However, payment volume saw a 2% gain as more household purchased big ticket entertainment items to keep themselves entertained while under lockdown.

Visa Inc - Other highlights

• Similar to Mastercard, Visa Inc also registered strong growth in payments processings locally and cross border.
• There is marginal concern as operating expenses have ballooned by +25%. 
• To date, Visa Inc has confirmed that staff layouff is on the table as it did not hire without discipline during QE period.

Visa Inc's CEO on Q4 2022 Results:

In our fiscal first quarter of 2023, Visa grew net revenues 12% YoY as we saw stable payments volume and processed transaction growth and a continued cross-border travel recovery. We had 8% growth in GAAP EPS, 21% growth in non-GAAP EPS and returned $4 Billion to shareholders... Visa Inc, CEO, Alfred Kelly.

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Why Is Visa Inc - Both A Good Price and Good Company ?

• Credit card financial services is a non-cyclical industry
• It is one of few industries that never sleeps
• Every second someone in the world is using his/her Visa issued credit card to make a purchase; online or at a local store.
• Being an early pioneer of deferred payment, it has a good lead time advantage to grow its customer base over many decades
• As the saying goes "money makes the world go round" and Visa Inc (through its multi discipline products) have been facilitating "worldwide" purchases, every step of the way.
• As the world economies gets more integrated and travelling more indispensable, the ability to go on a holiday without worrying about currency exchanges etc.. has quietly seeped into our lives; further endearing Visa to every working adult and somemore..
• While the "new" Buy Now Pay Later (BNPL) payment mode seemed to have gained traction, has been enthusiastically embracing BNPL (since 2021) for the same reason Visa Inc has pioneered revolving credit, debit and prepaid decades ago.

• Do you think Visa Inc is better than Mastercard or vice versa ?
• Do you think Visa Inc will have more upside than downside in 2023; given that holiday travelling is seeing a resurgent with countries opening up their borders to revive their tourism industry ?

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