Visa - Heed Slowing Growth and Lofty Valuation

Noah Kiedrowski - Contributor - Biotech - Visa

Heed Slowing Growth

Visa Inc. (NYSE:V) shareholders have witnessed a meteoric rise in share price since the post-Visa Europe integration which provided a double-digit annualized one-time boost to revenue growth and thus was being used as an incorrect growth comparator. Additionally, since Donald Trump was elected president, the vast majority of stocks have seen significant gains, and Visa is no exception, moving from $78 per share in December of 2016 to $126 in January of 2018 or a 60% appreciation. Now that Visa Europe has been fully reflected in its numbers, the double-digit revenue growth ceases to exist, and its lofty valuation is unjustified. Visa’s management has now forecasted revenue growth in the high single-digits for the foreseeable future with EPS growth in the mid-teens, artificially high due to share buybacks. With revenue growth rates slowing to single digits coupled with the past year appreciation and the stock boasting a P/E in excess of 40, I feel that further appreciation is unjustified and entering a position at these heightened levels is not prudent. Furthermore, Visa faces a rapidly changing landscape in the payments and peer-to-peer space with the likes of Pay Pal (PYPL), Square (SQ), Amazon (AMZN) and an emerging platform for bank transfers with Zelle. Blockchain technology also continues to gain ground in a variety of industries, and I feel that it will inevitably enter into the credit card transactions space. Continue reading "Visa - Heed Slowing Growth and Lofty Valuation"

Visa's Growth Slowdown Has Begun

Noah Kiedrowski - Contributor - Biotech


Final FY2017 numbers have been reported for Visa Inc. (NYSE:V) and FY2018 is now underway. I previously wrote an article proposing my thesis that growth will slow (not stop) starting with Q1 FY2018 numbers and now that FY2017 is in the books, I’ll be taking a clinical approach into this thesis as we approach Q1 FY18 numbers. As expected, Visa just recently reported another great quarter for Q4 FY2017 with beats on both the top and bottom line to round out the fiscal year. EPS and revenue estimates were beaten by $0.05 and $230 million, respectively. Visa had set new to all-time highs of ~$110 per share leading into the earnings report. Despite these beats on both the top and bottom line numbers, the stock responded in a relatively muted fashion. Investors have been accustomed to year-over-year quarterly growth in the double digits over the past year, specifically post Visa Europe acquisition and integration. For year-over-year revenue comparators post-Visa Europe integration, FYQ4 2016 growth was 19% followed by FY2017 revenue growth with FYQ1 at 25%, FYQ2 was 23%, FYQ3 was 26%, and FYQ4 was 14%.

FYQ4 2017 is a far departure from the previous four quarters of growth. Visa’s management is now forecasting revenue growth in the high single digits with EPS growth in the mid-teens, artificially high due to share buybacks. This forward-looking revenue growth rate is a shape divergence from the past year-plus revenue growth numbers investors were enjoying yet appears to be the new normal moving forward. As I posited previously, Visa’s growth rate will be slowing, now confirmed by Visa’s management and is thus misaligned with the stock’s 41% YTD appreciation, P/E ratio, PEG ratio and overall growth prospects. Continue reading "Visa's Growth Slowdown Has Begun"

Visa: The Disconnect Between Perceived Growth And Valuation?

Noah Kiedrowski - Contributor - Biotech


As expected, Visa Inc. (NYSE:V) reported another great quarter with beats on both the top and bottom lines. EPS and revenue estimates were beaten by $0.05 and $200 million, respectively. Since its earnings release, Visa has set new to all-time highs, currently sitting at ~$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 and 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, does this translate into a compelling investment opportunity for a great long-term position? I always felt that Visa was a great long-term holding that offered growth and stability independent of banks and/or interest rates. The fully integrated Visa enterprise in conjunction with major client wins will likely enable sustained and durable growth now and into the future, however, I feel that Visa is overvalued based on the first nine months of revenue from FY2017 and a pullback may be coming. Continue reading "Visa: The Disconnect Between Perceived Growth And Valuation?"

A Peek Inside 3 Billionaires' Portfolios

Today, I'm going to look at three of the biggest portfolio managers in the world and what they're holding in their portfolios. Each of these three billionaire investors have over half of their portfolios in just three stocks.

Warren Buffett

Everyone it seems has heard of Warren Buffett, the legendary investor from Omaha. I'll be looking at Mr. Buffett's Berkshire Hathaway holdings and his top three stocks and comparing them with the Trade Triangle signals.

Here are Mr. Buffett's (Berkshire Hathaway) top three holdings as of today: Continue reading "A Peek Inside 3 Billionaires' Portfolios"