Industry Comparison: Evaluating Visa Against Competitors In Financial Services Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Visa V in relation to its major competitors in the Financial Services industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 32.09 14.20 17.30 12.46% $6.48 $6.97 8.8%
Mastercard Inc 39.57 63.03 17.64 42.16% $3.67 $5.02 12.57%
Fiserv Inc 29.73 2.98 4.78 2.93% $2.15 $3.08 0.9%
PayPal Holdings Inc 15.40 3.01 2.20 6.87% $2.14 $3.67 8.71%
Global Payments Inc 35.59 1.51 3.64 1.59% $0.99 $1.51 8.03%
Fleetcor Technologies Inc 20.58 5.97 5.38 8.07% $0.51 $0.74 -3.46%
Jack Henry & Associates Inc 33.75 7.29 5.83 5.43% $0.17 $0.22 7.99%
WEX Inc 35.92 5.19 3.76 4.83% $0.22 $0.41 1.83%
StoneCo Ltd 26.11 1.82 2.37 2.94% $0.9 $2.18 25.35%
Euronet Worldwide Inc 19.71 4 1.52 5.79% $0.15 $0.36 -4.61%
DLocal Ltd 36.42 11.02 8.74 9.84% $0.1 $0.07 46.54%
Shift4 Payments Inc 45.85 11.35 2.12 8.62% $0.11 $0.18 23.41%
The Western Union Co 7.61 9.36 1.09 23.25% $0.22 $0.4 -4.14%
PagSeguro Digital Ltd 13.32 1.60 2.36 3.23% $1.68 $0.24 -0.99%
Evertec Inc 27.58 5.15 4.13 1.88% $0.03 $0.09 18.79%
Paymentus Holdings Inc 150.10 4.71 3.39 1.54% $0.01 $0.05 18.94%
Payoneer Global Inc 36.13 3.07 2.61 2.03% $0.04 $0.18 30.91%
Average 35.84 8.82 4.47 8.19% $0.82 $1.15 11.92%

When closely examining Visa, the following trends emerge:

  • A Price to Earnings ratio of 32.09 significantly below the industry average by 0.9x suggests undervaluation. This can make the stock appealing for those seeking growth.

  • It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 14.2 which exceeds the industry average by 1.61x.

  • The Price to Sales ratio of 17.3, which is 3.87x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

  • The company has a higher Return on Equity (ROE) of 12.46%, which is 4.27% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

  • With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.48 Billion, which is 7.9x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

  • The company has higher gross profit of $6.97 Billion, which indicates 6.06x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 8.8% is significantly below the industry average of 11.92%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.

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.

In terms of the Debt-to-Equity ratio, Visa stands in comparison with its top 4 peers, leading to the following comparisons:

  • When comparing the debt-to-equity ratio, Visa is in a stronger financial position compared to its top 4 peers.

  • The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.52.

Key Takeaways

For Visa, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, and gross profit, Visa demonstrates high profitability and operational efficiency. However, the low revenue growth may indicate a slower expansion rate compared to industry peers in the Financial Services sector.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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