Visa’s stock (NYSE: V) has increased 17% YTD, as compared to the 16% rise in the S&P500 over the same period. Further, at its current price of $243 per share, it is trading 11% below its fair value of $274 – Trefis’ estimate for Visa’s valuation. The company surpassed the street expectations in the third quarter of FY2023 (FY Oct-Sept), with net revenues (revenues minus client incentives) increasing 12% y-o-y to $8.12 billion. It was driven by a 15% growth in the services and data processing revenues, followed by a 14% rise in the international transactions income. Markedly, the key metrics – total nominal payments volume, number of processed transactions, and cross-border volume, grew 6%, 10%, and 22%, respectively. On the cost front, total expenses as a % of revenues decreased in the year. Overall, the net income improved 22% y-o-y to $4.16 billion.

The top-line grew 12% y-o-y to $24.04 billion in the first three-quarters of FY2023. In terms of segments, services revenues increased by 11%, followed by a 10% rise in domestic processing, and a 22% jump in international transaction revenues. Further, operating margin improved from 63.77% to 64.26%. Altogether, the profitability numbers (net income) increased 14% y-o-y to $12.59 billion.

Moving forward, we expect the Q4 results to be on similar lines as the third quarter. Notably, the consensus estimates of Q4 revenues and earnings are $8.57 billion and $2.25 respectively. Overall, Visa’s revenues are forecast (Trefis estimate) to touch $32.65 billion in FY2023. Additionally, VisaV
is expected to report an adjusted net income of $18 billion in the year. This coupled with an annual GAAP EPS of $8.57 and a P/E multiple of 32x will lead to a valuation of $274.

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