Does The Current Price Of Visa (V) Still Make Sense After Recent Gains?

• If you are wondering whether Visa's current share price still makes sense for a long term position, the key question is how its underlying value stacks up against what the market is willing to pay.
• Visa recently closed at US$346.48, with a 2.3% decline over the last 7 days, a 4.6% gain over the last 30 days, and returns of 11.5% over 1 year, 62.1% over 3 years, and 68.8% over 5 years.
• These moves have kept Visa on many investors' watchlists, especially as payment networks remain central to conversations about digital commerce and transaction volumes. Broader discussions around consumer spending, cross border payments, and competition in card networks continue to shape how investors think about Visa's long term prospects.
• Our valuation checks currently give Visa a 1 out of 6 valuation score. This suggests there is more work to do in understanding how traditional metrics, alternative models, and one often overlooked approach all line up. We will come back to that final method at the end of this article.

Visa scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Visa Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, based on its equity base. Instead of focusing on cash flows, it starts from book value and projected profitability to estimate what each share could be worth today.

For Visa, the model uses a Book Value of $19.38 per share and a Stable EPS of $15.99 per share, based on weighted future Return on Equity estimates from 13 analysts. With a Cost of Equity of $1.68 per share, the implied Excess Return is $14.31 per share, which reflects earnings above what investors are assumed to require. The Average Return on Equity input of 70.54% and a Stable Book Value of $22.67 per share, sourced from 9 analysts, are key drivers in this approach.

Putting these together, the Excess Returns model arrives at an estimated intrinsic value of about $367.97 per share, compared with the recent share price of $346.48. That implies the shares are about 5.8% undervalued, which is a relatively small gap.

Result: ABOUT RIGHT

Visa is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Visa.

Approach 2: Visa Price vs Earnings

For a profitable company like Visa, the P/E ratio is a useful way to relate what you pay per share to the earnings that each share generates. It helps you see how many dollars the market is willing to pay today for one dollar of current earnings.

What counts as a “normal” P/E often reflects two things: how quickly earnings are expected to grow and how much risk investors see in those earnings. Higher growth and lower perceived risk typically support a higher P/E, while slower growth or higher risk usually line up with a lower P/E.

Visa is trading on a P/E of 33.37x, which is well above the Diversified Financial industry average of 13.70x and also above the peer average of 17.24x. Simply Wall St’s proprietary Fair Ratio for Visa is 20.60x. This Fair Ratio is designed to be more tailored than a simple peer or industry comparison because it brings in factors like the company’s earnings growth profile, profit margins, market cap, risk indicators, and its specific industry.

Comparing Visa’s actual P/E of 33.37x with the Fair Ratio of 20.60x suggests the shares are trading at a premium to what this model implies.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1464 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Visa Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, where you combine your view of Visa’s story with your assumptions for future revenue, earnings, margins and a fair value. You can then compare that fair value with today’s price inside Simply Wall St’s Community page. Because Narratives update automatically when new information like news or earnings arrives, you can see, for example, one investor expecting Visa to be worth around US$430 based on confidence in long term payment volumes and stablecoin expansion. Another investor may see fair value closer to US$305 because of competition, regulation and alternative payment rails, with both turning those stories into numbers they can act on.

Do you think there's more to the story for Visa? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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