Visa enhances its special appeal

Article Excerpt

Dear client, Visa seems expensive in relation to its earnings. However, we feel the company’s low-risk business model and strong prospects justify this multiple. For example, as a payment processor, Visa doesn’t suffer when credit card users fall behind on their payments. The company also stands to gain from two fast-growing, long-term trends: e-commerce and electronic payments. VISA INC. $78 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 2.3 billion; Market cap: $179.4 billion; Price-to-sales ratio: 12.2; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions. The company’s systems can handle over 65,000 transactions per second. Visa gets most of its revenue from fees it charges the card issuers and merchants who use its network. These are based on transaction volumes and other factors. In addition, it’s the banks—and not Visa—that are responsible for evaluating customer creditworthiness and collecting payments. There are now over 3.1…

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