Author Topic: V - Visa  (Read 37011 times)

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'



orthopa

  • Hero Member
  • *****
  • Posts: 586
Re: V - Visa
« Reply #22 on: July 01, 2016, 06:07:43 PM »
Per Barrons


Evercore ISI

Thursday morning, The United States Court of Appeals for the Second Circuit vacated and reversed the approval of the December 2013 settlement of U.S. credit-card interchange litigation between Visa and MasterCard and a class of merchants in the Eastern District Court of New York and remanded the case to be reheard by the same Court.

The U.S. Court of Appeals concluded that the class plaintiffs or the merchants were inadequately represented in violation of Rule 23 (a)(4) and the Due Process Clause.

Based on our preliminary assessment, the negative financial impact on Visa (ticker: V) and MasterCard ( MA ) should be manageable, although it is too early to quantify. While the rehearing of this case could take years, Visa is indemnified against financial liability in merchant interchange litigation under the Retrospective Responsibility Plan (RRP) by its pre-initial-public-offering owner banks. MasterCard has no such indemnification by its pre-IPO banks. However, as of March 31, MasterCard’s balance sheet carried $2.875 billion of cash, net of debt. Second, the rehearing of this case will focus on Visa’s and MasterCard’s business practices. Even if the merchants win concessions, consumers ultimately will determine how credit and debit cards are used.

The Court of Appeals highlighted three of Visa’s and MasterCard’s business practices: 1) the setting of the default interchange fee, paid by merchants to Visa and MasterCard-card issuing banks; 2) the “honor-all-cards” rule requiring merchants who take at least one of Visa’s and MasterCard’s cards to take all of them; and 3) no “surcharging” rules, since separately, under a 2011 consent decree with the Department of Justice, Visa and MasterCard permitted merchants to discount transactions and to steer consumers away from credit-card use.

There were two classes of merchant plaintiffs in the Dec. 13, 2013 settlement. The first class, the “opt-out” class, or Rule 23 (b) (3), received monetary damages of $7.25 billion, to which Visa set aside $4.4 billion from its restricted cash escrow account and to which MasterCard set aside $790 million. The second class, the “non-opt-out” class, or Rule 23 (b)(2), received injunctive relief, such as the ability to surcharge both Visa and MasterCards at the brand and product level.

The Court of Appeals took issue with injunctive relief to the “non-opt-out” class terminating on July 20, 2021 whereas the merchants released Visa and MasterCard indefinitely from certain types of future potential claims.

Our biggest concern arising out of the Court of Appeals decision is that the retrying of such merchant interchange litigation could take years, creating an overhang on Visa and MasterCard stock. We are less concerned that the potential settlement will be highly material to Visa or MasterCard’s earnings growth outlook. With Visa stock down 3.4% today and MasterCard 4.4%, much of this is already discounted, we believe.

On Aug. 11, the District Court will hold a conference with all parties involved to discuss next steps in the litigation.

MasterCard trades at 21.2 times, and Visa, 21.8 times, our fiscal 2017 earnings-per-share estimates, respectively.

-- David Togut
-- Rayna Kumar
-- Anthony Cyganovich

I personally would welcome a prolonged overhang while materially not affecting the business. Id like to buy more of these businesses at a sub 20 PE.

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: V - Visa
« Reply #23 on: July 06, 2016, 09:25:05 AM »
Morningstar concludes:

http://news.morningstar.com/articlenet/article.aspx?id=758906&SR=Yahoo

Quote
Overall, we think these items support our thesis that merchants are exercising more power than they have in the past. That said, the handful of high-margin basis points retained by Visa and MasterCard pales in comparison with the larger fees paid to merchant acquirers and card issuers. Furthermore, security technology is changing fast, and the signature versus PIN debate may soon be obsolete. Regulatory and structural changes (network initial public offerings and the Visa/Visa Europe merger) have already increased competition considerably since the initial bouts of litigation more than a decade ago. Finally, we think the growing value of the data gathered by the networks offers upside potential that offsets the risks of further regulatory and legal actions. We are maintaining our fair value estimates for Visa and MasterCard.
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: V - Visa
« Reply #24 on: July 25, 2016, 09:23:38 AM »
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'


Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: V - Visa
« Reply #26 on: October 17, 2016, 04:09:23 PM »
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'

Phaceliacapital

  • Hero Member
  • *****
  • Posts: 1004
Re: V - Visa
« Reply #27 on: October 18, 2016, 05:43:13 AM »
Do you think there's something more behind this story?
The harder you work, the luckier you get.

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: V - Visa
« Reply #28 on: October 18, 2016, 07:06:00 AM »
Do you think there's something more behind this story?

No idea.
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10916
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: V - Visa
« Reply #29 on: October 24, 2016, 03:05:21 PM »
Visa fiscal Q4:

http://investor.visa.com/news/news-details/2016/Visa-Inc-Reports-Strong-Fiscal-Fourth-Quarter-and-Full-Year-2016-Results/default.aspx

Quote
GAAP quarterly net income of $1.9 billion or $0.79 per share, including special items

GAAP full-year 2016 net income was $6.0 billion or $2.48 per share, including special items

Adjusted quarterly net income of $1.9 billion or $0.78 per share, excluding special items

Adjusted full-year 2016 net income of $6.9 billion or $2.84 per share, excluding special items
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'