In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Visa (NYSE:V) in relation to its major competitors in the Financial Services industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Visa Background
Visa is the largest payment processor in the world. In fiscal 2022, it processed over $14 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 | 30.24 | 14 | 16.29 | 11.86% | $5.84 | $6.98 | 9.89% |
| Mastercard Inc | 35.21 | 56.86 | 16.22 | 42.49% | $3.92 | $4.83 | 10.44% |
| Fiserv Inc | 27.77 | 3.01 | 4.62 | 2.51% | $1.96 | $2.88 | 7.39% |
| PayPal Holdings Inc | 15.98 | 3.21 | 2.28 | 4.25% | $1.56 | $3.46 | 9.36% |
| Fidelity National Information Services Inc | 106.88 | 2.38 | 4.57 | 3.9% | $0.8 | $0.92 | 2.92% |
| Block Inc | 107.72 | 2.10 | 1.74 | 2.51% | $0.51 | $2.09 | 19.38% |
| Global Payments Inc | 18.97 | 1.10 | 2.54 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 18.87 | 5.48 | 4.96 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 30.86 | 6.56 | 5.34 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 28.83 | 4.18 | 2.95 | 3.66% | $0.23 | $0.39 | 6.65% |
| Euronet Worldwide Inc | 19.54 | 4.08 | 1.49 | 2.1% | $0.09 | $0.32 | 8.87% |
| Shift4 Payments Inc | 48.51 | 6.87 | 1.65 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 7.50 | 10.77 | 1.06 | 32.55% | $0.24 | $0.41 | 1.18% |
| StoneCo Ltd | 13.06 | 1.41 | 1.84 | 2.52% | $0.9 | $2.14 | 15.45% |
| PagSeguro Digital Ltd | 11.43 | 1.45 | 2.18 | 3.57% | $1.77 | $0.2 | 10.15% |
| Paymentus Holdings Inc | 84.57 | 5.50 | 3.76 | 1.66% | $0.02 | $0.05 | 24.64% |
| DLocal Ltd | 17.45 | 4.66 | 3.33 | 3.8% | $0.05 | $0.06 | 34.34% |
| Evertec Inc | 33.94 | 4.27 | 3 | 2.9% | $0.07 | $0.1 | 28.47% |
| Payoneer Global Inc | 18.97 | 3.21 | 2.56 | 4.37% | $0.05 | $0.19 | 18.84% |
| Average | 35.89 | 7.06 | 3.67 | 7.18% | $0.77 | $1.15 | 13.48% |
When closely examining Visa, the following trends emerge:
With a Price to Earnings ratio of 30.24, which is 0.84x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The elevated Price to Book ratio of 14.0 relative to the industry average by 1.98x suggests company might be overvalued based on its book value.
The Price to Sales ratio of 16.29, which is 4.44x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The Return on Equity (ROE) of 11.86% is 4.68% above the industry average, highlighting efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.84 Billion, which is 7.58x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $6.98 Billion, which indicates 6.07x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of 9.89% compared to the industry average of 13.48%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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:
Visa has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.53.
This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
For Visa, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, and gross profit, Visa demonstrates strong performance compared to competitors. However, the company's revenue growth is relatively low, which may impact its overall valuation within the Financial Services industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.