Visa Inc. (XNYS:V) In-Depth Stock/Fundamental/Options Analysis Today

Primary Facts

Name:

VISA INC. (XNYS:V)

Sector:

4.06B

Industry:

Credit Services

CEO:

Mr. Alfred Kelly

Total Employees:

21,500

Our Technological Advancement Rating

Our Rating:

Technological advancement compared to industry is -61.62% lower

ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF VISA INC.(V) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND CREDIT SERVICES INDUSTRY. DATE: 07/09/2022

Primary Targets/Price Insights

Previous Close ($) :

197.76

One Month Price Target:

$198.76

Six Month Price Target :

$203.75

Likely Price in One Year's Time:

Ticker:

$209.74

Likely Trading Range Today Under (Normal Volatility)

$197.11

Price Upper limit ($) :

$198.54

Price Lower limit ($) :

Crash Risk Prep/Key Price Levels (High Volatility/Risk)

Price, as per data analysis, isn't likely to fall below:

Today:

$189.17

This week:

$178.54

This month :

$159.33

Other Primary facts

Market Cap:

410.95B

Market Cap Classification:

Large Cap

Number of Shares

IPO Date:

2.07B

Best/Worst Daily Performance (Last 3+ Years)

Highest Daily Appreciation:

13.84%

-13.55%

Worst Daily Decline:

Our Options Trading Entry Points

Iron Condor entry points for options expiring in 1 week's time

Low risk (<2%) entry points

Buy Call:

Sell Call:

Buy Put:

Sell Put:

$237.64

$219.36

$157.88

$176.16

Medium risk (<10%) entry points

Buy Call

Sell Call

$213.41

Buy Put:

Sell Put:

$209.50

$182.06

$186.02

These entry points can be used for other strategies, such as butterflies, straddles, etc.

Risk-Adjusted returns (Sharpe Ratio) of

V

Sharpe Ratio:

1.21%

Comparison:

V, is amongst the top 60% stocks with highest risk-adjusted returns

Sharpe ratio is -34.69% lower than the industry

& is -46.73% lower than the market/S&P 500 average

Average Returns/Yield of

V

Daily returns:

0.03%

Weekly returns:

0.17%

Monthly returns:

0.69%

Yearly returns:

19.06%

Comparison of returns:

Average annual returns/yield (last 3 years) is -56.26% below industry average

Classification:

V, is amongst the top 60% highest yielding stocks in terms of daily returns

Results of T-Test of Returns:

0.75

Statistical test of Returns:

V has yielded returns statistically similar to the market

Volatility (measured by Standard Deviation)

Daily Volatility:

2.13%

Weekly Volatility:

4.77%

Monthly Volatility:

9.54%

Yearly Volatility:

33.04%

Volitlilty of last five days (Measured by Standard Deviation)

Average Volatility of this Week:

0.93%

Volatility in last five trading days has been -56.28% below long-term volatility

Value at Risk Analysis (VaR)

Daily VaR:

-4.35%

Weekly VaR:

-9.72%

Monthly VaR:

-19.43%

How Much Can the price of

V

Decline in a Recession?

Likely price decline in a recession:

Base case (decline):

-17%

Worst case (decline):

-67.32%

This translates to price declining to:

$164.56

This translates to price declining to:

$64.62

Severe Crash Probability

Risk of crash in next 6/12 months: Medium (<50%)

What is Value at Risk (VaR)?

Risk Fundamentals

V is a 37.17% riskier investment compared to the market/S&P 500 & is 17.51% riskier than Nasdaq (IXIC)

Risk (measured by volatility) is -35.37% below industry average

Overall, it is amongst the top 50% most risky stocks

Beta Examination of

V

Beta in relation to market/S&P 500--0.90

Expected beta in 1 year's time:

0.643

Expected beta in 3 year's time:

0.91

Unlevered (debt free) Beta:

0.658

Beta in relation to Nasdaq (XNAS):

0.855

Beta in relation to all global stocks::

0.799

Beta Comparison & Analysis

Beta of competitors/peers::

1.101

Beta is -18.10% lower than peers

Average Industry Beta:

1.332

Beta is -32.31% below industry average

Sustainable Growth Rate Analysis

Sustainable growth rate for this stock/firm:

27.38%

Sustainable growth rate is -18.86% below industry average

Alpha provided | Alpha Analysis

Alpha provided:

-0.010

Alpha is -114.55% below industry average alpha yield

Alpha is -63% below the market average

Analysis of Cost of Capital of

V

Equity cost of capital:

0.093

Equity cost of capital is -24.02% below industry mean WACC

Unlevered (without debt) cost of capital:

6.80%

Before-tax cost of debt:

2.50%

After-tax cost of debt:

1.98%

Overall debt rating:

Highest AAA investment grade

Weighted average cost of capital (WACC):

1.98%

WACC is -8.29% below industry mean WACC

Key Per-Share Metrics & Analysis

Revenue per share:

$13.02

Revenue growth rate per share of (3Y):

11.3

Annual revenue growth rate is -86.02% below industry average

EPS:

$5.59

Expected Annual growth rate of EPS (3Y):

-1.85%

Expected future EPS growth rate is -107.39% lower than the Credit Services industry

Free cash flow (FCF) per share:

$9.13

Balance sheet equity growth per share: 53.35%

Equity growth rate per share is 124.08% higher than the industry

Debt per share

$8.54

EBITDA per share

$9.41

Valuation Analysis Today of

V

P/E Ratio:

30.36

P/E Ratio of Competitors/Peers:

18.09

P/E ratio is 67.85% higher than main peers & is 150.13% higher than the industry

Stock price/value with industry average P/E ratio: $67.85

V is 191.47% overvalued if valued using industry average P/E ratio

Share value as per dividend discount (DDM) model: $35.23

Present value of the expected future dividends only: $21.33

P/S (Price to Sales ratio):

15.19

Price to sales ratio is 192.20% above the industry mean

P/B (Price to book value ratio):

11.3

Price to free cash flow: 21.66

Net income growth rate (3Y):

25.63%

Net income growth rate is 58.67% higher than the average industry net income growth rate

Dividend Analysis

Dividend payout rate: 5.88%

Dividend yeild: 0.73%

Previous Dividend: $0.38

Previous adjusted dividend: $0.38

Previous Dividend: $1.45

Expected next dividend best case: $0.40

Expected next dividend worst case: $0.35

Average dividend payment (long-term): $0.33

Average dividend increase/decrease (growth rate) % per period: 2.39%

Expected next dividend payment date: 30/08/2022

Expected next dividend record date: 08/11/2022

Expected next dividend declaration date: 21/07/2022

Previous dividend payment date: 06/01/2022

Previous dividend record date: 13/05/2022

Previous dividend declaration date: 22/04/2022

Dividend History:

2022-05-12--$0.38

2021-11-10--$0.38

2021-05-13--$0.32

2022-02-10--$0.38

2021-08-12--$0.32

2021-02-11--$0.32

Dividend growth rate is -124.98% lower than the industry average

In-depth Debt & Leverage Analysis

Debt to equity ratio:

48.83%

Net debt to equity ratio:

17.13%

Debt to assets ratio:

21.57%

Net debt to assets ratio:

7.57%

Debt-to-asset ratio is -72.33% below industry average

Ability to repay debt:

Interest coverage ratio:

37.14

Interest coverage ratio is 278.07% more than industry average

Looking forward:

Debt growth rate:

-12.85%

Annual debt growth is -126% lower than industry average debt growth rate

Debt repayment rate in last quarter: 1.36%

Analysis of Key Statistics

Correlation of price movement with the market:

0.819

Statistical significance of correlation:

V has a statistically significant correlation with the market

Average Correlation of the industry with the market:

0.561

Stock price is 45.97% more correlated with the market, compared to the industry average correlation

R Squared (percentage of price movement explained by movement of the market):

0.561

Correlation of price movement with Nasdaq (^IXIC):

0.008

Covariance of price movement with the market:

0.01

Kurtosis

7.91

Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns

Skewness of returns:

0.29

Returns are, approximately, symmetrical

Fundamental Analysis & Dupont Analysis of

V

Gross Profit Margin Ratio:

322%

Operating Profit Margin Ratio:

66.66%

Operating profit margin is 129.26% higher than the industry

Net Profit Margin Ratio:

322%

Effective Tax Rate:

24.06%

Effective tax rate is 11.11% higher than the industry

Dupont Method

Net Profit Margin

Return on Equity Ratio (ROE):

ROA

38.03%

Return on equity (ROE) is -10.30% lower than the industry

Financial Leverage

Asset Turnover Ratio (ROA):

16.80%

Return on assets (ROA) is 177.27% higher than the industry

Financial Leverage:

1.3x

Current Ratio:

1.4

Current ratio is -75.85% below industry average

Cash Conversion Cycle (days):

38.7

Cash conversion cycle is -70.80% below industry average

The remaining useful life of property plant & equipment is: 2.1 years

Stock based compensation to net income ratio:

0.93%

In-depth Efficiency Analysis

Revenue generated per employee:

1.3M

Each employee generates 73% more revenue than industry average revenue per employee

EBITDA generated per employee:

905.2K

Each employee generates 116% more EBITDA than industry average revenue per employee

Profit generated per employee:

640.2K

Each employee generates 164% more net income/profit than industry average revenue per employee

Free cash flow (FCF) generated per employee:

188.8K

Each employee generates 222% more free cash flow than industry average revenue per employee

Assets/Capital per employee

2.6M

Each employee generates 222% more free cash flow than industry average revenue per employee

Research & Development (R&D) Analysis

Competitors/Peer firms of

V

JPMORGAN CHASE & CO. (XNYS:JPM)

BANK OF AMERICA CORPORATION (XNYS:BAC)

MASTERCARD INCORPORATED. (XNYS:MA)

Siemens AG (XSWX:SIN)

WELLS FARGO & COMPANY (XNYS:WFC)

MORGAN STANLEY (XNYS:MS)

THE CHARLES SCHWAB CORPORATION (XNYS:SCHW)

ROYAL BANK OF CANADA (XNYS:RY)

THE TORONTO-DOMINION BANK (XNYS:TD)

Current Analyst Ratings

Strong buy�54%

Buy�92%

RISK CONCERN

​Investment Strategy, Risk Analysis, and Insights by Chartered Professionals