I've been critical of
Visa (NYSE: V) for a while now. In short,
I've thought it to be a great company trading at a greater
valuation.
I still feel that way. But I'll admit: Visa is proving its
ability to withstand this global recession and retrenchment
in consumer spending far better than I had thought.
Net income in its fourth quarter came in at $514 million,
or $0.69 per share. That was up from a loss of $0.45 in the
same period last year, but last year's results
includedbig one-time litigation payments to
Discover Financial (NYSE: DFS) and
American Express (NYSE: AXP), so it isn't
really comparable. Revenue jumped 10%, to $1.9 billion.
Visa also upped its dividend by 19%, and authorized a $1
billion share buyback plan. I'm all for dividends, but
investors may wish to
question the timingof a buyback plan after shares have
nearly doubled since January.
If there was a negative, it came from purchase volume
growth (or lack thereof): Â Â
Period
Reported Worldwide
Payment Volume Growth
Q3 2008
19.1%
Q4 2008
15.2%
Q1 2009
12.4%
Q2 2009
(0.9%)
Q3 2009
(5.5%)
Q4 2009
(1.7%)
While the fall in payment volume is waning, it's falling
nonetheless. Chalk that up to a 5.3% decrease in worldwide
credit volume, and a stunning 9.6% decline in U.S. credit
volume.
But here's the thing: There's a one-quarter lag in Visa's
payment volume reporting. So numbers reported for Q4 actually
accrued for the quarter ended in June, Q3's numbers reflect
the quarter ended in March, and so on. This is important to
note because American Express and
Capital One (NYSE: COF)
both
reportedsequential increases in purchase volume when they
reported last week. Odds are, then, that Visa actually
isback on the road to payment volume growth.
And the other big factor contributing to the bottom line
-- total processed transactions -- is still growing quite
nicely:
Period
Processed Transactions Growth
Continued... |