Summary
– Through the first 9 months of FY2017, Visa has only grown revenue by an aggregate of 2.33%.
– The Visa Europe acquisition has been a tailwind for the company, translating into phenomenal transaction and volume growth; however, this was expected.
– Visa has been a best in-class large-cap growth stock; however, I‘ll contend that the growth rate is misleading and the incorrect comparator is being used as a growth barometer.
– Visa has one more quarter to continue these great numbers with Q1 FY2018 revealing the true growth story.
– Q1 FY2018 will likely disappoint as this will be the first year of the fully integrated Visa Europe numbers – stock price has gotten ahead of itself, appreciating 27% YTD.
Introduction
Through the first 9 months of FY2017, Visa (NYSE: V) has only grown revenue by an aggregate of 2.33%. Q3 FY2017 revenue came in at $4.565 billion relative to $4.461 billion for Q1 FY2017. I previously wrote an article proposing my thesis that growth will slow (not stop) starting with Q1 FY2018 numbers and the latest quarterly results further support this position. As expected, Visa just recently reported another great quarter for Q3 FY2017 with beats on both the top and bottom line.
EPS and revenue estimates were beat by $0.05 and $200 million, respectively. Since its earnings release, Visa has set new to all-time highs of ~$100 per share. The Visa Europe acquisition has been a tailwind for the company, translating into phenomenal transaction and volume growth; however, this was expected. Beginning with the initial quarter Visa started reporting the fully integrated company, these numbers have been fantastic.
Visa has been posting great growth across all segments of its enterprise further accentuated by the Visa Europe acquisition. Meanwhile the company continues to grow its dividends and engage in consistent share repurchases. It’s noteworthy to point out that Visa has been buying back its own stock at near all-time highs as of recent. Visa has continued to be a best in-class large-cap growth stock; however, I‘ll contend that the growth rate is misleading and the incorrect comparator is being used as a growth barometer.
