Visa’s outlook still bright despite higher rates

Article Excerpt

Visa’s shares are down about 20% from their recent peak of $236, mainly due to fears that higher interest rates will prompt a drop in credit card use. However, its long-term outlook remains bright as more people shift to electronic payments instead of cash. VISA INC. $194 is a buy. The company (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 2.1 billion; Market cap: $407.4 billion; Price-to-sales ratio: 15.6; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic-payments network. It processes credit, debit, prepaid and commercial transactions in over 200 countries. Visa gets most of its revenue from the fees it charges card issuers and merchants using its network. That business model means the banks—and not Visa—are responsible for evaluating customer creditworthiness and collecting payments, which helps to cut risk for investors. In 2016, the company acquired full control of its European division. That’s partly why its revenue jumped 25.2%, from $18.36 billion in 2017 to $22.98 billion in…

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