On Dec 26, Visa Inc. (V) reached a new 52-week high of $269.32 per share, driven by its expansion initiative, a solid fourth-quarter beat and a dividend hike. With about 1.2 million shares exchanging hands, the stock closed the trading session at $266.62.
The year-to-date return from the stock came in at 19.7%, which was ahead of the S&P’s return of 13%.
Visa has been continuously expanding its technology centers globally with Bangalore, India being its latest site. Bangalore, being the innovation hub of India, will help the company attract diversified talent from leading universities thereby resulting in tremendous growth in world-class innovation centers and technology facilities.
With respect to earnings performance, Visa has been delivering positive surprises in each of the last four quarters with an average surprise of 2.37%. In the 4Q14, the financial transaction services provider delivered operating earnings per Class A common share of $2.18, outperforming the Zacks Consensus Estimate of $2.11 and also improved 17% year over year. The growth was driven by higher card spending and strong performance across all segments.
Visa has been strengthening its balance sheet with total assets reaching $38.57 billion from $35.96 billion at fiscal 2013-end, and operating cash flow of $7.21 coming significantly higher from the 2013-end level. Moreover, the company has also been improving its debt position with long-term debt remaining nil at fiscal 2014-end.
Visa has also been consistently enhancing shareholders’ value through dividend payments and share buybacks. On Oct 22, 2014, the board declared a 20% hike in its quarterly dividend to 48 cents per share of class A common stock from the prior 40 cents, marking the sixth consecutive annual dividend increment. This brings the annual dividend to $1.92 per share from the prior payout of $1.60. The company’s dividend increased at a five-year CAGR of 30.8%, better than the industry average of 8.03%.
This Zacks Rank #2 (Buy) stock has also been witnessing upward revisions in the last 60 days. For fiscal 2015, the Zacks Consensus Estimate moved north by 0.7% to $10.41 as 14 out of 20 estimates moved up and for fiscal 2016 it rose 2% to $12.11 as 7 out of 19 estimates moved up. The long-term growth is targeted at 17.20%.
Other Stocks to Consider
Stocks like Alliance Data Systems Corporation (ADS), Envestnet, Inc. (ENV) and MasterCard Incorporated (MA) hold the same Zacks Rank as Visa.
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