Visa (V)

Global payments technology company Visa (NYSE:V) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 11.5% year on year to $10.72 billion. Its non-GAAP profit of $2.98 per share was in line with analysts’ consensus estimates.

Company Overview

Processing over 829 million transactions daily and connecting billions of cards to 150 million merchant locations worldwide, Visa (NYSE:V) operates one of the world's largest electronic payments networks, facilitating secure money movement across more than 200 countries through its VisaNet processing platform.

Credit card companies facilitate electronic payments and extend revolving credit to consumers. Growth comes from increasing digital payment adoption, cross-border transaction growth, and value-added services for cardholders and merchants. Challenges include regulatory scrutiny of fees and practices, competition from alternative payment methods, and potential credit losses during economic downturns.

Visa's primary competitors include Mastercard (NYSE:MA), American Express (NYSE:AXP), and Discover Financial Services (NYSE:DFS) in the card payment network space. The company also faces competition from alternative payment methods such as PayPal (NASDAQ:PYPL), Block's Cash App (NYSE:SQ), and regional payment networks like China's UnionPay and India's RuPay.

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Visa grew its revenue at a solid 12.9% compounded annual growth rate. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Visa’s annualized revenue growth of 10.7% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Visa reported year-on-year revenue growth of 11.5%, and its $10.72 billion of revenue exceeded Wall Street’s estimates by 1.1%.

Financial services companies rely heavily on the total number of transactions and loan originations to drive top-line growth. Understanding these volumes is essential for finding winners in the sector.

Visa’s volumes have grown at an annual rate of 39.5% over the last five years, much better than the broader financials industry and faster than its total revenue. When analyzing Visa’s volumes over the last two years, we can see that growth halted as volumes were flat. Its recent performance could limit any potential valuation multiple expansion.

Visa’s volumes punched in at $0.09 this quarter, beating analysts’ expectations by 8.2%. This print was 16.9% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Credit Card companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Financials companies manage interest-bearing assets and liabilities, making the interest income and expenses included in pre-tax profit essential to their profit calculation. Taxes, being external factors beyond management control, are appropriately excluded from this alternative margin measure.

Over the last four years, Visa’s pre-tax profit margin has risen by 6.2 percentage points, going from 66.6% to 60.5%. It has also declined by 3.9 percentage points on a two-year basis, showing its expenses have consistently increased at a faster rate than revenue. This usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

In Q3, Visa’s pre-tax profit margin was 58%. This result was 8.2 percentage points worse than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Visa’s EPS grew at a remarkable 17.9% compounded annual growth rate over the last five years, higher than its 12.9% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its pre-tax profit margin didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Visa, its two-year annual EPS growth of 14.4% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Visa reported adjusted EPS of $2.98, up from $2.71 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Visa’s full-year EPS of $11.47 to grow 12%.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Visa has averaged an ROE of 43.9%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Visa has a strong competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Visa currently has $25.17 billion of debt and $37.91 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.6×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

We were impressed by how Visa blew past analysts’ transaction volume expectations this quarter, which drove its revenue beat. Zooming out, we think this was a decent quarter. The stock remained flat at $348.75 immediately after reporting.

Updated: December 3, 2025 at 11:09 PM EST

Before deciding whether to buy Visa or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Visa is a high-quality business worth owning. First of all, the company’s revenue growth was solid over the last five years. And while its declining pre-tax profit margin shows the business has become less efficient, its stellar ROE suggests it has been a well-run company historically. On top of that, Visa’s transaction volume growth was exceptional over the last five years.

Visa’s P/E ratio based on the next 12 months is 25.8x. This multiple isn’t necessarily cheap, but we’ll happily own Visa as its fundamentals shine bright. Investments like this should be held patiently for at least three to five years as they benefit from the power of long-term compounding, which more than makes up for any short-term price volatility that comes with relatively high valuations.

Wall Street analysts have a consensus one-year price target of $394.43 on the company (compared to the current share price of $329.80).