狗仔卡
发表于 2013-9-13 07:05 AM
Disclosure: I am long V.
Visa (V) is a global payments and technology company that connects consumers, financial institutions, and merchants. On July 24, 2013, the company reported fiscal third quarter earnings of $1.88 per share which beat the consensus of analyst estimates by $0.07. The stock is up 42.67% excluding dividends, and is beating the S&P 500, which has gained 17.07% in the same time frame. I currently hold Visa in my growth portfolio and with all this in mind I'd like to take a moment to evaluate the stock on a fundamental, financial, and technical basis to see if it's worth buying some more stock in the company right now.
Fundamentals
Visa currently trades at a trailing 12-month P/E ratio of 31.91, which is fairly priced, but I mainly like to purchase a stock based on where the company is going in the future as opposed to what it has done in the past. On that note, the 1-year forward-looking P/E ratio of 20.78 is currently fairly priced as well for the future in terms of the right here, right now. For growth stocks I don't mind them being fairly or expensively priced because it means that institutional investors are willing to pay a premium for future earnings. Next year's estimated earnings are $8.90 per share versus TTM earnings of $5.80. The 1-year PEG ratio (1.84), which measures the ratio of the price you're currently paying for the trailing 12-month earnings on the stock while dividing it by the earnings growth of the company for a specified amount of time (I like looking at a 1-year horizon), tells me that the company is fairly priced based on a 1-year EPS growth rate of 17.27%. In the financials sector of my growth portfolio I like looking at 1-yr earnings growth greater than 15% and 5-yr earnings growth of greater than 15% as well.
Financials
On a financial basis, the things I look for are the dividend payouts, return on assets, equity and investment. Visa yields a dividend of 0.71% with a payout ratio of 22% of trailing 12-month earnings (or 97% based on free cash flow) while sporting return on assets, equity and investment values of 14.9%, 20% and 7.5%, respectively, which are all respectable values, but nothing to go writing home about. The company has been raising its dividend for the past four years and I have no doubts it will continue to raise it in the future with the low payout ratio. Don't be too surprised if the dividend is raised the next time they issue a dividend, which I expect to be sometime in November.
Technicals
(click to enlarge)
Looking first at the relative strength index chart [RSI] at the top, I see the stock coming down from overbought territory with a value of 61.4 with downward trajectory, which is a bearish pattern. To confirm that, I will look at the moving average convergence-divergence [MACD] chart next and see that the black line is above the red line with the divergence bars flattening out in height, indicating the stock is may come up on some downward momentum. As for the stock price itself ($185.06), I'm looking at $189.73 to act as resistance and the 50-day moving average to act as support for a risk/reward ratio, which plays out to be -1.31% to 2.52%.
Recent News
- The company was recently added to the Dow Jones Industrial Average Index
- CFO Bryon Pollitt has created a pre-arranged plan where he can sell up to 63,748 shares of company stock and is scheduled to end November 2014.
- The Fed announced it will appeal a ruling by a judge to strike down a cap on swipe fees for debit card purchases. Visa draws a higher percentage of its revenues from debit cards than MasterCard (MA) or American Express (AXP) do and bodes well for the time being for Visa.
Conclusion
Visa is fairly valued based on future earnings and on future growth prospects (one-year outlook) with analysts expecting 17.27% growth in the coming year. Financially this is a solid company with little short-term or long-term debt; the dividend payout ratio is low based on trailing 12-month earnings and I don't doubt management will be able to continue to increase the dividend at a double digit clip going forward. The technical situation of how the stock is currently trading is telling me we might be seeing some more downward pressure for now. The double digit earnings growth rate, potential double digit dividend growth rate and strike down a cap on debit card swipe fees are what I like about the company, but personally I'm not going to be buying right now. Right now I'm basically flat on my position (+0.45%) and I will continue to hold onto the shares I have, reinvesting the dividends, but I like to see how September shakes out as it is usually the worst month for the stock market.
Disclaimer: These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!
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