Visa Inc. Class A (V)

Conclusion

Visa Inc. Class A runs VisaNet, a network that authorises, clears and settles card and other payment transactions, and sells credit, debit and prepaid card products to consumers, sellers, financial institutions and government entities. On 2026-11-09 the shares trade at 422.16 USD, giving a market capitalisation of 729.5 billion USD.

The verdict is fair. Against their own ten-year medians, the P/E of 31.0x sits below 32.8x and the EV/EBITDA of 24.4x below 25.2x, while the P/B of 20.2x is well above its median of 12.7x. The fair value band runs from 322.10 to 483.16 USD with a midpoint of 402.63 USD, a margin of safety of -4.6% at the current price. The DCF gives 369.09 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 436.17 USD. The reverse DCF implies revenue growth of 12.6% a year, against 13.8% revenue CAGR over five years and 11.8% FCF per share CAGR over five years.

What holds the case up is the return on capital: ROIC of 54.7% against a WACC of 8.7%, FCF conversion of 93.8% on a trailing basis and 104.6% over five years, and eight earnings beats in eight quarters. What would weaken it is the current ratio of 0.97, which is at a watch level, the operating margin of 61.2% against a ten-year median of 64.4%, and the price itself, which sits above the DCF of 369.09 USD and leaves little cushion if growth slows.

Financial health

Financial strength is grey, because Visa is a financial business and debt is part of its trade, so the scorecard assessment does not apply. The current ratio of 0.97 is at a watch level, and the quick ratio of 0.63 is also thin. Net debt to EBITDA of 0.26x, debt to equity of 0.61 and interest coverage of 38.1x all point to a low debt burden. The Altman Z-score of 9.20 sits in the safe zone, but the model was designed for manufacturers and Visa is not one, so this reading carries limited weight. Insolvency risk: these models do not apply to a financial business.

Earnings quality

Earnings quality is green, supported by strong cash conversion and a shrinking share count. FCF conversion is 93.8% on a trailing basis and 104.6% over five years, and the accrual ratio of -0.0023 shows cash earnings running ahead of reported earnings. Stock-based compensation is 2.0% of revenue, and free cash flow after it is 21.13 billion USD. The share count fell at a compound rate of 2.7% over five years, meaning buybacks more than offset dilution. Visa passed 7 of 8 evaluable Piotroski tests. The Beneish M-score is not available in the data. The company beat estimates in all 8 recent quarters, by an average of 2.9%. Estimate revisions are mixed: the current-year estimate moved 0.4% over 90 days, with 9 upward and 4 downward revisions in the last 30 days.

Profitability

Profitability is green. Gross margin of 80.4% matches its ten-year median of 80.4%, and net margin of 51.2% is in line with its median of 51.1%. Operating margin of 61.2% is below its median of 64.4%, which the scorecard rates as neutral. Margin stability is 0.03. ROIC of 54.7% compares with a WACC of 8.7%, and the reported spread is 46.0%, with a five-year median ROIC of 46.4%. ROE of 65.1% is inflated by leverage: the DuPont split gives a net margin of 51.2%, an asset turnover of 0.49x and an equity multiplier of 2.61x. Most of the return therefore comes from margins and capital efficiency, with leverage adding a further boost.

Growth

Growth is green. Revenue compounded at 12.0% over three years, 13.8% over five and 11.8% over ten. EPS grew faster, at 14.2% over three years, 17.0% over five and 17.4% over ten. FCF per share compounded at 7.0% over three years, 11.8% over five and 18.7% over ten, so recent free cash flow growth has been slower than the decade average. Revenue grew in 9 of the last 10 years. Consensus expects next-year EPS growth of 14%, which the scorecard rates as good.

Valuation

Valuation is yellow, with the verdict of fair and a margin of safety of -4.6%. Today's multiples sit mostly below their ten-year medians: P/E of 31.0x against 32.8x (a premium of -5.4%), EV/EBITDA of 24.4x against 25.2x (-3.2%), and P/S of 15.9x against 16.6x (-4.4%). P/FCF of 33.1x is above its median of 30.8x (+7.3%), and P/B of 20.2x is well above 12.7x (+59.3%). The DCF gives 369.09 USD per share at a discount rate of 8.87%, with the terminal value making up 60.7% of the result. The fair value from historical multiples is 436.17 USD. The reverse DCF implies growth of 12.6%, slightly below the 13.8% revenue CAGR over five years. The fair value is an order-of-magnitude estimate built on fixed assumptions, not a price target. The dividend yield is 0.7%, with a payout of 23.2% of free cash flow.

Risks

The main risk is valuation. The price of 422.16 USD sits above the DCF of 369.09 USD, and the terminal value makes up 60.7% of that DCF, so a slower long-term growth rate or a higher discount rate would lower the value. A current ratio of 0.97 leaves little liquidity headroom, although interest coverage of 38.1x suggests debt service is not a near-term concern. A decline in operating margin toward or below the ten-year median would weaken the return on capital that supports the premium. A fall in cash conversion below the five-year level of 104.6% would undermine the earnings quality case. The Beneish M-score is not available, and the analysis has no debt maturity schedule and no revenue split by segment, so these areas cannot be checked. The fair value band is based on fixed assumptions, including a 5% equity risk premium and capped growth, and is only an order of magnitude.