Visa (V) is a global payments technology company that connects consumers, businesses, financial institutions and governments across the globe. Its stock has been trading on the New York Stock Exchange since March 2008, and the company has a market capitalization of $195 billion, according to Google Finance.

The company has been in news with its announcement to acquire Visa Europe in a deal worth up to $23 billion. Visa Europe is a payments technology business owned and operated by member banks and other payment-service providers from 38 countries. Once a single entity, Visa Europe has been operating independently of Visa Inc. since 2004. The two companies, however, have worked in a partnership to enable global payments across more than 200 countries and territories. (Related reading: Visa to Acquire Visa Europe for 21.2 Billion Euros.)

Stock and Financials

Visa Inc. has sound financials with its revenue rising at a steady pace over the years. Revenue for fiscal 2015 ended on Sept. 30 rose 9% to $13.88 billion from a year earlier, driven by growth in service, data-processing and international transaction revenue. Service revenue rose 9% to $6.3 billion, data-processing revenue rose 7% to $5.6 billion, and international-transaction revenue rose 14% to $4.1 billion.

The company’s earnings have also risen at a good pace since the stock's listing with a dip experienced in fiscal 2012. In its latest fiscal year, net income rose 16.4% to $6.33 billion. Visa has also been consistent with its slight, yet quarterly, dividends, as shown in the table below. The company has also announced a $5 billion share-repurchase program.

Dividend (Annual)

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

$0.05

$0.11

$0.13

$0.17

$0.25

$0.35

$0.42

$0.50

Source: Nasdaq

The graph below compares the stock movement of Visa with MasterCard (MA) and the S&P 500. Shares of Visa are up about 21% year to date, compared with a 13% gain for MasterCard and 1.7% advance for the S&P 500. (Related reading, see: Visa vs. MasterCard: Is There a Difference?)

The shares of Visa have been mostly range-bound since the announcement of the acquisition plans in early November and predictably so as shareholders and perspective investors are busy gauging its impact on the stock. For its part, Visa said it expects the financial benefits of the deal will begin to accrue in fiscal 2017

The Bottom Line

Since its listing on the NYSE, the track record of Visa has been impressive. It has grown steadily despite weak global economic health, and is poised to benefit from the increasing use globally of debit and credit cards. Visa has sound fundamentals with a healthy revenue stream from its different segments and comfortable cash flows. The company’s plan to acquire Visa Europe may add some short-term volatility to its earnings and stock, but will pay off in time, which makes Visa a good long-term pick.

The author does not own shares of Visa or MasterCard.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.