In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Visa (NYSE:V) in relation to its major competitors in the Financial Services industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.
Visa Background
Visa is the largest payment processor in the world. In fiscal 2023, it processed almost $15 trillion in total volume. Visa operates in over 200 countries and processes transactions in over 160 currencies. Its systems are capable of processing over 65,000 transactions per second.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Visa Inc | 27.21 | 12.91 | 14.88 | 12.62% | $6.45 | $7.13 | 1.42% |
| Mastercard Inc | 34.38 | 55.50 | 15.83 | 42.49% | $3.92 | $4.83 | 10.44% |
| Fiserv Inc | 28.03 | 3.35 | 4.87 | 2.51% | $1.96 | $2.88 | 7.39% |
| PayPal Holdings Inc | 14.63 | 2.94 | 2.08 | 4.25% | $1.56 | $3.46 | 9.36% |
| Fidelity National Information Services Inc | 104.62 | 2.33 | 4.47 | 3.9% | $0.8 | $0.92 | 2.92% |
| Block Inc | 102.85 | 2.01 | 1.67 | 2.51% | $0.51 | $2.09 | 19.38% |
| Global Payments Inc | 19.56 | 1.13 | 2.62 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 21.28 | 6.17 | 5.59 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 32.36 | 6.88 | 5.60 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 29.07 | 4.21 | 2.97 | 3.66% | $0.23 | $0.39 | 6.65% |
| Euronet Worldwide Inc | 17.36 | 3.71 | 1.32 | 6.76% | $0.18 | $0.41 | 15.08% |
| PagSeguro Digital Ltd | 13.49 | 1.71 | 2.58 | 3.57% | $1.77 | $0.2 | 10.15% |
| Shift4 Payments Inc | 44.20 | 6.26 | 1.50 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 7.33 | 10.54 | 1.03 | 32.55% | $0.24 | $0.41 | 1.18% |
| StoneCo Ltd | 14.06 | 1.52 | 1.98 | 2.52% | $0.9 | $2.14 | 15.45% |
| Paymentus Holdings Inc | 86.70 | 5.64 | 3.85 | 1.66% | $0.02 | $0.05 | 24.64% |
| Evertec Inc | 34.45 | 4.33 | 3.04 | 2.9% | $0.07 | $0.1 | 28.47% |
| DLocal Ltd | 16.91 | 4.51 | 3.23 | 3.8% | $0.05 | $0.06 | 34.34% |
| Payoneer Global Inc | 17.90 | 3.03 | 2.42 | 4.37% | $0.05 | $0.19 | 18.84% |
| Average | 35.51 | 6.99 | 3.7 | 7.44% | $0.78 | $1.15 | 13.82% |
By thoroughly analyzing Visa, we can discern the following trends:
At 27.21, the stock's Price to Earnings ratio is 0.77x less than the industry average, suggesting favorable growth potential.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 12.91 which exceeds the industry average by 1.85x.
The Price to Sales ratio of 14.88, which is 4.02x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 12.62% that is 5.18% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.45 Billion, which is 8.27x above the industry average, indicating stronger profitability and robust cash flow generation.
The gross profit of $7.13 Billion is 6.2x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
The company's revenue growth of 1.42% is significantly below the industry average of 13.82%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In light of the Debt-to-Equity ratio, a comparison between Visa and its top 4 peers reveals the following information:
Visa is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.54.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For Visa, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, and gross profit, Visa demonstrates high profitability and operational efficiency. However, the low revenue growth may raise concerns about future performance compared to industry peers in the Financial Services sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.