Author Topic: V - Visa  (Read 37012 times)

Liberty

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Re: V - Visa
« Reply #10 on: June 29, 2011, 08:41:18 PM »
When was the last time you've seen am American Express debit card?

Rare.

My bad. I wasn't following this story very closely (I don't own any of these stocks, except maybe indirectly through BRK) and didn't notice that this was about debit card fees and not credit card fees.
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jeyfox

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Re: V - Visa
« Reply #11 on: August 01, 2015, 03:44:34 PM »
Hi,
I was a shareholder of this company and thought it would be interesting to keep following it even if the price is not great.
With the 3rd quarter results, V managed to get some double digit increase in revenus. It is quite impressive yet the P/FCF is at 31! Great company just too expensive in my opinion.
At the end of october, we will have some news concerning their discussions to buy back Visa Europe.
There was an article in the french press which gave some numbers:
- an amount which was given (and represents the higher end)  was 17,8 billion euros which represents 13,7 times Visa Europe revenues or 50 times the 2014 FCF of Visa Europe…
- another price (lower end) was more towards 25 times the FCF.
We will see.
Cheers!
Jeremy
No holdings in Visa.

Liberty

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Re: V - Visa
« Reply #12 on: October 29, 2015, 10:33:53 AM »
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Liberty

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Phaceliacapital

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Re: V - Visa
« Reply #14 on: November 02, 2015, 05:51:49 AM »
I read that it's around 214 mn in profits... How do you justify this?
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vinod1

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Re: V - Visa
« Reply #15 on: November 02, 2015, 06:15:15 AM »
I read that it's around 214 mn in profits... How do you justify this?

Not justifying the price paid, but the profits are below what they would be if Visa Europe has been completely independent entity. They are owned by the banks and so limited in their ability to hike up the fees for network usage.

The price to be paid is tied to Visa's own valuation. So what Visa is paying is based on Visa's forward PE multiple applied to adjusted forward earnings of Visa Europe.

Vinod
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merkhet

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Re: V - Visa
« Reply #16 on: November 02, 2015, 06:15:37 AM »
Page 55, http://annualreport.visaeurope.com/files/pdf/visa_europe_annual_report_2014_complete.pdf

My guess is Visa Europe's revenue is a little above to €1.4 billion this year. On 17% net margins, the 2015 net earnings should be around €238 million in profits.

The big difference is in the fact that:
  • Visa Europe was run by banks, so fees were probably lower than they should be
  • Visa U.S. has 43% net margins and Visa Europe's additional revenue has high contribution margins

Phaceliacapital

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Re: V - Visa
« Reply #17 on: November 02, 2015, 07:29:11 AM »
Ok but 43% on 1.4 bn is still +/- 36x earnings, not a lot of margin of safety for execution..
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merkhet

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Re: V - Visa
« Reply #18 on: November 02, 2015, 09:33:56 AM »
Ok but 43% on 1.4 bn is still +/- 36x earnings, not a lot of margin of safety for execution..

Yes, but the contribution margin is significantly higher than 43%. (Check out the impact on operating margins and/or operating income for every 10% increase in revenues at Visa U.S.)

In other words, I think that Visa Europe is duplicating a lot of expenses that are already incurred at Visa U.S. And then add some pricing increase on the top line.

I'm not saying it's a home run type of investment for Visa. I'm just saying it's not as bad as paying 100x earnings. :)

orthopa

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Re: V - Visa
« Reply #19 on: November 02, 2015, 09:39:27 AM »
Looks like V didnt buy back any stock in Q4. They are usually quite smart about the price they pay during the Q when they buyback. Not saying the price is too high and to sell but management seems its best to hold off. Added another 5B so looks like ~7.5B left to buyback.

Hopefully the price comes in some. Will allow more buyback and Id like to get  a little more under ~20 times.

Agree that fees can be raised, not cheap but it always seems like these deals happen near lofty valuations such as now. Euro is the weakest its been in years so that helps price some.