Today's winner: Visa
About the Company:
Visa Inc. operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services linking issuers and acquirers. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, Interlink, and PLUS brand names. In addition, it offers value-added services, including risk management, debit issuer processing, loyalty, dispute management, and value-added information services. The company was incorporated in 2007 and is headquartered in San Francisco, California
Analysis:
Visa is one of the Hybrid Financials in the overall Financial market dominated by Banks and Investment management company. Its is either credit card company or a Bank, They make money when you swipe the card or pay online for a service or a product. Its a great business model evolved out of century old middleman services. They make money whether economy is good or bad or in recession. Thats why Visa and MasterCard with their global presence and wide acceptance has strong balance sheet and deliver consistent financial results.
One of the recent key changes or regulations set by the Federal Government has been causing setting a serious setback to the stock price... Please reference this article which states the risk from the new regulations in the Credit card and debit card market.
http://www.ft.com/cms/s/0/8c37024e-2c8d-11e0-83bd-00144feab49a.html#ixzz1CkUR4dn9
Lets do technical analysis of the stock,
lets start with 52 week stock price chart
V - Daily Candlesticks: "
via StockCharts.com
"
You can see that stock got beaten up pretty badly making a 52 week low around December 2010. It was major drop in the stock price, Master card also took a big nosedive the same day.. I would consider that a big overreaction on the market sentiment towards a Government regulation which was seen coming for many months. It really surprised me that it came right around the Holiday season when the whole world was spending using the Debit and Credit card processed by Visa.
lets see the current valuation based on its posted earnings
This shows that the stock is grossly undervalued when 4th qtr 2010 earnings of $1.06 per share on 10/27/10. This beat the $0.94 consensus of the 28 analysts covering the company.
Considering the great holiday season and renewed consumer confidence Visa will surpass the $1.29 EPS high estimate with ease. The stock price is currently undervalued based on the earnings last few quarters and additional earnings and high revenue will boost the stock price to a historic rally in next few months .
We also need consider the fact that credit card disclosure and the additional fees will be passed to the underlaying banks by Visa and MasterCard , so i see a very minor effect to its balance sheet on the long run..
I start Visa with Stock price target of $85 in next 3 months
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About the Company:
Visa Inc. operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services linking issuers and acquirers. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, Interlink, and PLUS brand names. In addition, it offers value-added services, including risk management, debit issuer processing, loyalty, dispute management, and value-added information services. The company was incorporated in 2007 and is headquartered in San Francisco, California
Analysis:
Visa is one of the Hybrid Financials in the overall Financial market dominated by Banks and Investment management company. Its is either credit card company or a Bank, They make money when you swipe the card or pay online for a service or a product. Its a great business model evolved out of century old middleman services. They make money whether economy is good or bad or in recession. Thats why Visa and MasterCard with their global presence and wide acceptance has strong balance sheet and deliver consistent financial results.
One of the recent key changes or regulations set by the Federal Government has been causing setting a serious setback to the stock price... Please reference this article which states the risk from the new regulations in the Credit card and debit card market.
http://www.ft.com/cms/s/0/8c37024e-2c8d-11e0-83bd-00144feab49a.html#ixzz1CkUR4dn9
Lets do technical analysis of the stock,
lets start with 52 week stock price chart
V - Daily Candlesticks: "
via StockCharts.com
"
You can see that stock got beaten up pretty badly making a 52 week low around December 2010. It was major drop in the stock price, Master card also took a big nosedive the same day.. I would consider that a big overreaction on the market sentiment towards a Government regulation which was seen coming for many months. It really surprised me that it came right around the Holiday season when the whole world was spending using the Debit and Credit card processed by Visa.
lets see the current valuation based on its posted earnings
|
This shows that the stock is grossly undervalued when 4th qtr 2010 earnings of $1.06 per share on 10/27/10. This beat the $0.94 consensus of the 28 analysts covering the company.
Considering the great holiday season and renewed consumer confidence Visa will surpass the $1.29 EPS high estimate with ease. The stock price is currently undervalued based on the earnings last few quarters and additional earnings and high revenue will boost the stock price to a historic rally in next few months .
We also need consider the fact that credit card disclosure and the additional fees will be passed to the underlaying banks by Visa and MasterCard , so i see a very minor effect to its balance sheet on the long run..
I start Visa with Stock price target of $85 in next 3 months
If you like the article , please Book Mark and Recommend to you friends...optionally you can click on the commercial Ad's as a show of support to my blog.
Visa eventually did post high earnings as i expected, especially on the increased International Transaction volume . The Stock has not posted any big red flags , except that the company was not very clear with the debit card regulations which was expected to create a big dent in the Revenue..One of the biggest positive is the $3 billion cash flow which can used your tough times. I would wait for a Good Entry point if it does drop couple of points tomorrow, with All the negativity priced in, the chances of going higher is more as mentioned in the Blog. Remember always Buy when everybody else hates it and Sell when everybody loves it.
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