In this environment, Visa Inc. ( NYSE:V ) continues to produce excellent results, demonstrating once more how effective it is as an inflation hedge. Additionally, Visa recently increased both its share repurchase program and dividend by an impressive 20%. Although Visa stock is not particularly cheap per se, given its quality, growth, and historical valuation norm, Visa is a good investment.
Excellent Fourth Quarter Results for Visa
In November, Visa Inc. released its most recent quarterly results. Revenues for the company’s fiscal fourth quarter increased by 19% year over year to $7.8 billion. Even better, the company outperformed expectations once more, as it has every quarter for the past two years.
Although one might think they should have learned from past mistakes, Wall Street analysts still underestimate the company. But since that benefits investors, I’m pleased with Visa’s ongoing performance above what analysts predict each quarter.
With $1.93 in earnings per share, Visa outperformed expectations regarding its bottom-line performance. Visa beat revenue estimates by 3%, which explains some of that. However, Visa also produced a higher profit margin than Wall Street had predicted. Although Visa has maintained excellent margins for many years, the business still finds ways to increase its margins from a high base.
Visa Benefits From Inflation
Visa, a provider of payment technology, retains a portion of each transaction that cardholders of its cards make. When inflation increases consumer spending on goods like groceries, gas, and other items, Visa profits because it takes a steady percentage of the increased payment, many other businesses experience higher inflation, particularly when their costs increase due to rising labor, transporta...
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