Intrinsic value of VISA Cl A - V

Previous Close

$122.93

  Intrinsic Value

$84.06

stock screener

  Rating & Target

sell

-32%

Previous close

$122.93

 
Intrinsic value

$84.06

 
Up/down potential

-32%

 
Rating

sell

We calculate the intrinsic value of V stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  21.72
  13.90
  13.01
  12.21
  11.49
  10.84
  10.26
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
  6.48
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  18,358
  20,910
  23,630
  26,515
  29,561
  32,765
  36,126
  39,641
  43,310
  47,135
  51,117
  55,259
  59,565
  64,041
  68,692
  73,525
  78,548
  83,771
  89,203
  94,855
  100,738
  106,865
  113,249
  119,904
  126,845
  134,087
  141,649
  149,545
  157,797
  166,422
  175,440
Variable operating expenses, $m
 
  9,764
  10,838
  11,976
  13,179
  14,443
  15,770
  17,157
  18,605
  20,115
  21,686
  21,810
  23,510
  25,276
  27,112
  29,020
  31,002
  33,064
  35,208
  37,438
  39,760
  42,179
  44,698
  47,325
  50,065
  52,923
  55,908
  59,024
  62,281
  65,685
  69,245
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,214
  9,764
  10,838
  11,976
  13,179
  14,443
  15,770
  17,157
  18,605
  20,115
  21,686
  21,810
  23,510
  25,276
  27,112
  29,020
  31,002
  33,064
  35,208
  37,438
  39,760
  42,179
  44,698
  47,325
  50,065
  52,923
  55,908
  59,024
  62,281
  65,685
  69,245
Operating income, $m
  12,144
  11,146
  12,792
  14,539
  16,383
  18,322
  20,356
  22,484
  24,705
  27,020
  29,430
  33,449
  36,055
  38,764
  41,580
  44,505
  47,546
  50,707
  53,995
  57,416
  60,977
  64,686
  68,550
  72,579
  76,780
  81,164
  85,741
  90,521
  95,516
  100,736
  106,195
EBITDA, $m
  12,700
  13,786
  15,580
  17,482
  19,490
  21,602
  23,818
  26,135
  28,555
  31,076
  33,702
  36,433
  39,272
  42,223
  45,289
  48,475
  51,787
  55,231
  58,812
  62,538
  66,417
  70,457
  74,666
  79,053
  83,630
  88,405
  93,390
  98,596
  104,037
  109,723
  115,669
Interest expense (income), $m
  489
  582
  744
  917
  1,101
  1,295
  1,500
  1,714
  1,938
  2,172
  2,416
  2,670
  2,934
  3,209
  3,494
  3,791
  4,099
  4,419
  4,752
  5,099
  5,459
  5,834
  6,225
  6,632
  7,056
  7,499
  7,961
  8,443
  8,947
  9,473
  10,023
Earnings before tax, $m
  11,694
  10,564
  12,049
  13,622
  15,282
  17,027
  18,856
  20,770
  22,767
  24,848
  27,014
  30,779
  33,121
  35,556
  38,085
  40,714
  43,447
  46,288
  49,243
  52,318
  55,518
  58,852
  62,325
  65,947
  69,724
  73,665
  77,780
  82,078
  86,569
  91,263
  96,173
Tax expense, $m
  4,995
  2,852
  3,253
  3,678
  4,126
  4,597
  5,091
  5,608
  6,147
  6,709
  7,294
  8,310
  8,943
  9,600
  10,283
  10,993
  11,731
  12,498
  13,296
  14,126
  14,990
  15,890
  16,828
  17,806
  18,825
  19,890
  21,001
  22,161
  23,374
  24,641
  25,967
Net income, $m
  6,699
  7,712
  8,796
  9,944
  11,156
  12,430
  13,765
  15,162
  16,620
  18,139
  19,721
  22,468
  24,179
  25,956
  27,802
  29,722
  31,716
  33,790
  35,947
  38,192
  40,528
  42,962
  45,498
  48,141
  50,898
  53,776
  56,779
  59,917
  63,195
  66,622
  70,206

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13,438
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  67,977
  62,047
  70,119
  78,680
  87,719
  97,227
  107,198
  117,628
  128,517
  139,866
  151,682
  163,973
  176,751
  190,032
  203,832
  218,174
  233,081
  248,579
  264,697
  281,468
  298,925
  317,106
  336,050
  355,797
  376,394
  397,886
  420,322
  443,755
  468,240
  493,832
  520,594
Adjusted assets (=assets-cash), $m
  54,539
  62,047
  70,119
  78,680
  87,719
  97,227
  107,198
  117,628
  128,517
  139,866
  151,682
  163,973
  176,751
  190,032
  203,832
  218,174
  233,081
  248,579
  264,697
  281,468
  298,925
  317,106
  336,050
  355,797
  376,394
  397,886
  420,322
  443,755
  468,240
  493,832
  520,594
Revenue / Adjusted assets
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
  0.337
Average production assets, $m
  29,743
  33,874
  38,281
  42,955
  47,889
  53,080
  58,524
  64,218
  70,162
  76,358
  82,809
  89,519
  96,496
  103,746
  111,280
  119,110
  127,248
  135,709
  144,509
  153,665
  163,195
  173,121
  183,463
  194,244
  205,488
  217,222
  229,471
  242,264
  255,631
  269,603
  284,213
Working capital, $m
  9,029
  -3,032
  -3,426
  -3,845
  -4,286
  -4,751
  -5,238
  -5,748
  -6,280
  -6,835
  -7,412
  -8,013
  -8,637
  -9,286
  -9,960
  -10,661
  -11,389
  -12,147
  -12,934
  -13,754
  -14,607
  -15,495
  -16,421
  -17,386
  -18,392
  -19,443
  -20,539
  -21,684
  -22,881
  -24,131
  -25,439
Total debt, $m
  18,367
  21,247
  26,203
  31,459
  37,009
  42,847
  48,969
  55,374
  62,059
  69,028
  76,283
  83,830
  91,675
  99,830
  108,303
  117,109
  126,262
  135,777
  145,674
  155,971
  166,690
  177,853
  189,484
  201,610
  214,256
  227,452
  241,228
  255,616
  270,649
  286,363
  302,795
Total liabilities, $m
  35,217
  38,097
  43,053
  48,309
  53,859
  59,697
  65,819
  72,224
  78,909
  85,878
  93,133
  100,680
  108,525
  116,680
  125,153
  133,959
  143,112
  152,627
  162,524
  172,821
  183,540
  194,703
  206,334
  218,460
  231,106
  244,302
  258,078
  272,466
  287,499
  303,213
  319,645
Total equity, $m
  32,760
  23,950
  27,066
  30,370
  33,859
  37,530
  41,378
  45,404
  49,607
  53,988
  58,549
  63,294
  68,226
  73,352
  78,679
  84,215
  89,969
  95,951
  102,173
  108,647
  115,385
  122,403
  129,715
  137,338
  145,288
  153,584
  162,244
  171,289
  180,740
  190,619
  200,949
Total liabilities and equity, $m
  67,977
  62,047
  70,119
  78,679
  87,718
  97,227
  107,197
  117,628
  128,516
  139,866
  151,682
  163,974
  176,751
  190,032
  203,832
  218,174
  233,081
  248,578
  264,697
  281,468
  298,925
  317,106
  336,049
  355,798
  376,394
  397,886
  420,322
  443,755
  468,239
  493,832
  520,594
Debt-to-equity ratio
  0.561
  0.890
  0.970
  1.040
  1.090
  1.140
  1.180
  1.220
  1.250
  1.280
  1.300
  1.320
  1.340
  1.360
  1.380
  1.390
  1.400
  1.420
  1.430
  1.440
  1.440
  1.450
  1.460
  1.470
  1.470
  1.480
  1.490
  1.490
  1.500
  1.500
  1.510
Adjusted equity ratio
  0.354
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,699
  7,712
  8,796
  9,944
  11,156
  12,430
  13,765
  15,162
  16,620
  18,139
  19,721
  22,468
  24,179
  25,956
  27,802
  29,722
  31,716
  33,790
  35,947
  38,192
  40,528
  42,962
  45,498
  48,141
  50,898
  53,776
  56,779
  59,917
  63,195
  66,622
  70,206
Depreciation, amort., depletion, $m
  556
  2,640
  2,787
  2,943
  3,107
  3,280
  3,462
  3,652
  3,850
  4,056
  4,271
  2,984
  3,217
  3,458
  3,709
  3,970
  4,242
  4,524
  4,817
  5,122
  5,440
  5,771
  6,115
  6,475
  6,850
  7,241
  7,649
  8,075
  8,521
  8,987
  9,474
Funds from operations, $m
  4,628
  10,352
  11,583
  12,887
  14,263
  15,710
  17,227
  18,814
  20,470
  22,195
  23,992
  25,452
  27,395
  29,414
  31,512
  33,692
  35,958
  38,314
  40,764
  43,314
  45,968
  48,733
  51,613
  54,616
  57,748
  61,016
  64,428
  67,992
  71,716
  75,609
  79,680
Change in working capital, $m
  -4,580
  -370
  -394
  -418
  -442
  -465
  -487
  -510
  -532
  -555
  -577
  -601
  -624
  -649
  -674
  -701
  -728
  -757
  -788
  -820
  -853
  -888
  -926
  -965
  -1,006
  -1,050
  -1,096
  -1,145
  -1,196
  -1,251
  -1,308
Cash from operations, $m
  9,208
  10,722
  11,977
  13,305
  14,705
  16,175
  17,714
  19,323
  21,002
  22,750
  24,569
  26,053
  28,019
  30,063
  32,186
  34,393
  36,686
  39,071
  41,552
  44,134
  46,821
  49,621
  52,539
  55,581
  58,754
  62,066
  65,525
  69,137
  72,913
  76,860
  80,987
Maintenance CAPEX, $m
  0
  -991
  -1,129
  -1,276
  -1,432
  -1,596
  -1,769
  -1,951
  -2,141
  -2,339
  -2,545
  -2,760
  -2,984
  -3,217
  -3,458
  -3,709
  -3,970
  -4,242
  -4,524
  -4,817
  -5,122
  -5,440
  -5,771
  -6,115
  -6,475
  -6,850
  -7,241
  -7,649
  -8,075
  -8,521
  -8,987
New CAPEX, $m
  -707
  -4,131
  -4,407
  -4,674
  -4,935
  -5,191
  -5,444
  -5,694
  -5,945
  -6,196
  -6,451
  -6,710
  -6,976
  -7,250
  -7,534
  -7,830
  -8,138
  -8,461
  -8,800
  -9,156
  -9,531
  -9,926
  -10,342
  -10,781
  -11,244
  -11,733
  -12,249
  -12,793
  -13,367
  -13,972
  -14,610
Cash from investing activities, $m
  735
  -5,122
  -5,536
  -5,950
  -6,367
  -6,787
  -7,213
  -7,645
  -8,086
  -8,535
  -8,996
  -9,470
  -9,960
  -10,467
  -10,992
  -11,539
  -12,108
  -12,703
  -13,324
  -13,973
  -14,653
  -15,366
  -16,113
  -16,896
  -17,719
  -18,583
  -19,490
  -20,442
  -21,442
  -22,493
  -23,597
Free cash flow, $m
  9,943
  5,599
  6,441
  7,355
  8,338
  9,387
  10,501
  11,678
  12,916
  14,215
  15,573
  16,583
  18,059
  19,596
  21,194
  22,854
  24,578
  26,369
  28,229
  30,161
  32,168
  34,256
  36,426
  38,684
  41,035
  43,484
  46,035
  48,695
  51,470
  54,366
  57,390
Issuance/(repayment) of debt, $m
  2,488
  4,629
  4,956
  5,256
  5,550
  5,838
  6,122
  6,404
  6,686
  6,969
  7,255
  7,547
  7,846
  8,154
  8,474
  8,806
  9,153
  9,516
  9,897
  10,297
  10,719
  11,163
  11,631
  12,125
  12,646
  13,196
  13,776
  14,388
  15,033
  15,714
  16,432
Issuance/(repurchase) of shares, $m
  -6,742
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,345
  4,629
  4,956
  5,256
  5,550
  5,838
  6,122
  6,404
  6,686
  6,969
  7,255
  7,547
  7,846
  8,154
  8,474
  8,806
  9,153
  9,516
  9,897
  10,297
  10,719
  11,163
  11,631
  12,125
  12,646
  13,196
  13,776
  14,388
  15,033
  15,714
  16,432
Total cash flow (excl. dividends), $m
  5,834
  10,228
  11,397
  12,612
  13,888
  15,225
  16,624
  18,082
  19,602
  21,184
  22,828
  24,129
  25,905
  27,750
  29,667
  31,659
  33,731
  35,884
  38,125
  40,458
  42,887
  45,419
  48,057
  50,809
  53,681
  56,680
  59,811
  63,083
  66,504
  70,081
  73,822
Retained Cash Flow (-), $m
  152
  -2,879
  -3,116
  -3,304
  -3,489
  -3,670
  -3,849
  -4,026
  -4,203
  -4,381
  -4,561
  -4,744
  -4,932
  -5,126
  -5,327
  -5,536
  -5,754
  -5,982
  -6,222
  -6,474
  -6,739
  -7,018
  -7,312
  -7,623
  -7,950
  -8,296
  -8,660
  -9,045
  -9,451
  -9,879
  -10,330
Prev. year cash balance distribution, $m
 
  11,689
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  19,038
  8,282
  9,307
  10,399
  11,555
  12,775
  14,056
  15,399
  16,803
  18,267
  19,385
  20,973
  22,624
  24,340
  26,124
  27,977
  29,902
  31,904
  33,985
  36,149
  38,401
  40,745
  43,187
  45,731
  48,384
  51,151
  54,038
  57,053
  60,202
  63,492
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  18,253
  7,581
  8,100
  8,562
  8,957
  9,271
  9,496
  9,625
  9,652
  9,577
  9,206
  8,950
  8,602
  8,171
  7,669
  7,109
  6,506
  5,875
  5,233
  4,593
  3,972
  3,381
  2,831
  2,329
  1,882
  1,492
  1,160
  883
  657
  478
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Visa Inc. (Visa) is a payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners and government entities to electronic payments. The Company operates through payment services segment. The Company enables global commerce through the transfer of value and information among the participants. The Company's transaction processing network facilitates authorization, clearing and settlement of payment transactions and enables to provide its financial institution and merchant clients a range of products, platforms and value-added services. The Company is a retail electronic payment network based on payments volume, number of transactions and number of cards in circulation. Its products/services include core products, processing infrastructure, transaction processing services, digital products, merchant products, and risk products and payment security initiatives.

FINANCIAL RATIOS  of  VISA Cl A (V)

Valuation Ratios
P/E Ratio 41.7
Price to Sales 15.2
Price to Book 8.5
Price to Tangible Book
Price to Cash Flow 30.4
Price to Free Cash Flow 32.9
Growth Rates
Sales Growth Rate 21.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.2%
Cap. Spend. - 3 Yr. Gr. Rate 5%
Financial Strength
Quick Ratio 8
Current Ratio 0.2
LT Debt to Equity 50.7%
Total Debt to Equity 56.1%
Interest Coverage 25
Management Effectiveness
Return On Assets 10.6%
Ret/ On Assets - 3 Yr. Avg. 13%
Return On Total Capital 13.4%
Ret/ On T. Cap. - 3 Yr. Avg. 16.9%
Return On Equity 20.4%
Return On Equity - 3 Yr. Avg. 20.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 69.4%
EBITDA Margin - 3 Yr. Avg. 65.5%
Operating Margin 66.2%
Oper. Margin - 3 Yr. Avg. 61.2%
Pre-Tax Margin 63.7%
Pre-Tax Margin - 3 Yr. Avg. 60.5%
Net Profit Margin 36.5%
Net Profit Margin - 3 Yr. Avg. 40.6%
Effective Tax Rate 42.7%
Eff/ Tax Rate - 3 Yr. Avg. 32.5%
Payout Ratio 23.6%

V stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the V stock intrinsic value calculation we used $18358 million for the last fiscal year's total revenue generated by VISA Cl A. The default revenue input number comes from 2017 income statement of VISA Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our V stock valuation model: a) initial revenue growth rate of 13.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for V is calculated based on our internal credit rating of VISA Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of VISA Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of V stock the variable cost ratio is equal to 47.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for V stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for VISA Cl A.

Corporate tax rate of 27% is the nominal tax rate for VISA Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the V stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for V are equal to 162%.

Life of production assets of 80.6 years is the average useful life of capital assets used in VISA Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for V is equal to -14.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $32760 million for VISA Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2272.76 million for VISA Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of VISA Cl A at the current share price and the inputted number of shares is $279.4 billion.

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COMPANY NEWS

▶ Is American Express Company a Buy?   [Feb-23-18 07:48AM  Motley Fool]
▶ Visa Inc. to Participate in Upcoming Investor Conference   [Feb-22-18 04:05PM  Business Wire]
▶ Is Visa Inc. a Buy?   [10:30AM  Motley Fool]
▶ Is it time to get the Amazon Prime Rewards Visa Card?   [01:35PM  Yahoo Finance Video]
▶ Why Chloe Kim is a 'marketer's dream'   [Feb-17-18 11:52PM  Yahoo Finance]
▶ Apples CEO is surprised this piece of tech hasnt taken over yet   [Feb-14-18 11:13AM  Yahoo Finance Video]
▶ Groupon stock tanks after earnings miss   [10:42AM  Yahoo Finance Video]
▶ 3 Big Catalysts for Visa From Its 1st Quarter   [Feb-09-18 03:28PM  Motley Fool]
▶ Share Buybacks Double Under Trump Tax Plan   [Feb-08-18 12:36PM  Investopedia]
▶ Visa Inc. Earnings Jump 25%   [Feb-06-18 08:15PM  Motley Fool]
▶ Practice Discipline With Your Visa   [09:47AM  TheStreet.com]
▶ Why Visa Earnings Are Leaving Investors Cool   [08:25AM  24/7 Wall St.]
▶ [$$] Mastercard Lands Cabelas Credit-Card Business   [12:11AM  The Wall Street Journal]
▶ [$$] Visa's Revenue and Profit Rise   [05:47PM  The Wall Street Journal]
▶ Visa, Mastercard Beat On Holiday Shopping; Visa Shares Fall   [05:09PM  Investor's Business Daily]
▶ How to Play Visa as Earnings Approach   [10:30AM  TheStreet.com]
▶ PayPal: Just how bad is the eBay breakup?   [08:08AM  MarketWatch]
▶ [$$] Mastercard Lands Cabela's Credit-Card Business   [04:56AM  The Wall Street Journal]
▶ If You're in Your 40s, Consider Buying These 3 Stocks   [Jan-29-18 09:04PM  Motley Fool]
▶ Better Stock: Square (SQ) vs. Visa (V)   [07:45PM  Motley Fool]
▶ Better Stock: Visa (V) vs. Discover (DFS)   [Jan-25-18 05:36PM  Motley Fool]
▶ Visa pins its Winter Olympics ad campaign on new payment technology   [07:37AM  American City Business Journals]
▶ Why Amazon's Stock Is Surging 15% Ahead Of Earnings   [Jan-23-18 02:20PM  Investopedia]
Financial statements of V
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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