In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Visa V and its primary competitors in the Financial Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide 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 | 27.46 | 13.03 | 15.02 | 12.62% | $6.45 | $7.13 | 9.57% |
| Mastercard Inc | 34.39 | 56 | 15.96 | 44.44% | $4.32 | $5.35 | 11.04% |
| Fiserv Inc | 27.17 | 3.19 | 4.73 | 3.14% | $2.22 | $3.12 | 7.38% |
| PayPal Holdings Inc | 15.23 | 3.11 | 2.17 | 5.46% | $1.75 | $3.61 | 8.21% |
| Fidelity National Information Services Inc | 75.69 | 2.45 | 4.44 | 1.39% | $0.8 | $0.95 | 2.68% |
| Block Inc | 53.75 | 1.85 | 1.56 | 1.02% | $0.6 | $2.23 | 11.21% |
| Global Payments Inc | 18.25 | 1.13 | 2.60 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 19.64 | 6.90 | 5.18 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 32 | 6.80 | 5.54 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 29.27 | 3.90 | 2.73 | 4.32% | $0.25 | $0.41 | 8.4% |
| Euronet Worldwide Inc | 16.73 | 3.55 | 1.25 | 6.76% | $0.18 | $0.41 | 5.02% |
| Shift4 Payments Inc | 42.35 | 6 | 1.44 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 6.99 | 8.79 | 0.96 | 33.62% | $0.24 | $0.4 | -8.85% |
| StoneCo Ltd | 13.36 | 1.44 | 1.88 | 2.52% | $0.9 | $2.14 | 15.45% |
| PagSeguro Digital Ltd | 12.14 | 1.54 | 2.32 | 3.57% | $1.77 | $0.2 | 10.15% |
| Payoneer Global Inc | 23.96 | 3.61 | 2.76 | 4.37% | $0.05 | $0.19 | 18.84% |
| Paymentus Holdings Inc | 81.96 | 5.33 | 3.64 | 1.66% | $0.02 | $0.05 | 24.64% |
| DLocal Ltd | 16.75 | 4.47 | 3.20 | 3.8% | $0.05 | $0.06 | 34.34% |
| Evertec Inc | 30.69 | 4.26 | 2.70 | 6.44% | $0.09 | $0.11 | 26.88% |
| Average | 30.57 | 6.91 | 3.61 | 7.72% | $0.83 | $1.21 | 12.22% |
By closely studying Visa, we can observe the following trends:
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A Price to Earnings ratio of 27.46 significantly below the industry average by 0.9x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 13.03 relative to the industry average by 1.89x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 15.02, which is 4.16x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 12.62% is 4.9% above the industry average, highlighting efficient use of equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.45 Billion, which is 7.77x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $7.13 Billion, which indicates 5.89x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company is witnessing a substantial decline in revenue growth, with a rate of 9.57% compared to the industry average of 12.22%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
By analyzing Visa in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Compared to its top 4 peers, Visa has a stronger financial position indicated by its lower debt-to-equity ratio of 0.54.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
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.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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