Competitor Analysis: Evaluating Visa And Competitors In Financial Services Industry

In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Visa V and its primary competitors in the Financial Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 30.41 14.08 16.38 11.86% $5.84 $6.98 9.89%
Mastercard Inc 38.64 61.36 17.23 42.16% $3.67 $5.02 12.57%
Fiserv Inc 28.95 3.14 4.82 2.51% $1.96 $2.88 7.39%
PayPal Holdings Inc 17.45 3.35 2.49 6.87% $2.14 $3.67 8.71%
Block Inc 3765.50 2.49 2.11 0.98% $0.15 $2.03 24.13%
Fidelity National Information Services Inc 81.69 2.04 4.18 1.3% $0.66 $0.97 -0.59%
Global Payments Inc 33.07 1.38 3.38 1.59% $0.99 $1.51 8.03%
Corpay Inc 23.11 6.62 6.04 8.07% $0.51 $0.74 6.08%
Jack Henry & Associates Inc 32.51 7.02 5.62 5.43% $0.17 $0.22 7.99%
WEX Inc 35.56 5.15 3.63 3.66% $0.23 $0.39 6.65%
StoneCo Ltd 17.63 1.77 2.35 4.53% $1.13 $2.3 20.35%
Euronet Worldwide Inc 19.03 3.84 1.46 5.79% $0.15 $0.36 10.63%
The Western Union Co 7.99 11.49 1.13 32.55% $0.24 $0.41 1.18%
DLocal Ltd 29.69 9.24 6.78 6.44% $-0.02 $0.07 58.75%
PagSeguro Digital Ltd 12.68 1.54 2.32 3.74% $1.79 $0.2 7.56%
Shift4 Payments Inc 41.79 5.72 1.42 2.6% $0.09 $0.2 31.19%
Paymentus Holdings Inc 114.33 5.95 4.19 2.22% $0.02 $0.05 24.68%
Evertec Inc 31.69 4.16 3.63 2.04% $0.06 $0.1 20.29%
Payoneer Global Inc 20.71 2.79 2.35 4.15% $0.03 $0.19 22.21%
Average 241.78 7.72 4.17 7.59% $0.78 $1.18 15.43%

After a detailed analysis of Visa, the following trends become apparent:

  • With a Price to Earnings ratio of 30.41, which is 0.13x 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 14.08 relative to the industry average by 1.82x suggests company might be overvalued based on its book value.

  • The stock's relatively high Price to Sales ratio of 16.38, surpassing the industry average by 3.93x, may indicate an aspect of overvaluation in terms of sales performance.

  • With a Return on Equity (ROE) of 11.86% that is 4.27% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

  • Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.84 Billion, which is 7.49x above the industry average, indicating stronger profitability and robust cash flow generation.

  • The company has higher gross profit of $6.98 Billion, which indicates 5.92x above the industry average, indicating 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 15.43%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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.

When assessing Visa against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

  • 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 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 raise concerns about future performance 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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