Visa Has Grown Earnings per Share by 17% a Year for a Decade. Can the Stock Keep Compounding?
Analysts expect the company to continue its streak of double-digit net income growth over the next three fiscal years.
Visa (V) is a financial stock that has consistently grown its earnings per share (EPS) at an annualized rate of 17.4% over the past decade, leading to a remarkable total return of 459% for its stock price. This consistent growth has been driven by a 15% increase in revenue, fueled by a 9% rise in payment volume. Analysts project a compound annual growth rate of 13.7% for adjusted EPS over the next three fiscal years.
Visa has only tapped half of its total addressable market, based on global consumer card payment volume. The company has been expanding its value-added services, such as issuing, acceptance, risk, security, and advisory solutions, which grew by 30% year-over-year in the latest fiscal year. Visa is also exploring innovative solutions like stablecoins and agentic commerce partnerships.
While these new ventures may not have a significant immediate impact on financial performance, they demonstrate the company's willingness to adapt and evolve. Despite the stock's impressive past performance, investors should be cautious as growth rates are expected to slow down over time. The current valuation, with a forward price-to-earnings ratio of 27.5, may not be considered a bargain by some.
However, Visa's vast cardholder base and its potential for further expansion make it a compelling option for long-term investors.
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