Intrinsic value of VISA Cl A - V

Previous Close

$107.55

  Intrinsic Value

$158.71

stock screener

  Rating & Target

buy

+48%

  Value-price divergence*

+8%

Previous close

$107.55

 
Intrinsic value

$158.71

 
Up/down potential

+48%

 
Rating

buy

 
Value-price divergence*

+8%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 246.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.66
  25.80
  23.72
  21.85
  20.16
  18.65
  17.28
  16.05
  14.95
  13.95
  13.06
  12.25
  11.53
  10.87
  10.29
  9.76
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
  6.84
  6.66
  6.49
  6.34
  6.21
  6.09
  5.98
Revenue, $m
  15,082
  18,973
  23,474
  28,602
  34,369
  40,778
  47,825
  55,503
  63,800
  72,703
  82,196
  92,267
  102,903
  114,094
  125,831
  138,110
  150,930
  164,293
  178,207
  192,681
  207,729
  223,368
  239,621
  256,510
  274,064
  292,314
  311,295
  331,043
  351,599
  373,007
  395,312
Variable operating expenses, $m
 
  6,195
  7,307
  8,574
  9,999
  11,583
  13,325
  15,222
  17,272
  19,472
  21,818
  22,800
  25,428
  28,193
  31,093
  34,128
  37,296
  40,598
  44,036
  47,613
  51,331
  55,196
  59,212
  63,385
  67,723
  72,233
  76,923
  81,803
  86,882
  92,172
  97,684
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
  7,199
  6,195
  7,307
  8,574
  9,999
  11,583
  13,325
  15,222
  17,272
  19,472
  21,818
  22,800
  25,428
  28,193
  31,093
  34,128
  37,296
  40,598
  44,036
  47,613
  51,331
  55,196
  59,212
  63,385
  67,723
  72,233
  76,923
  81,803
  86,882
  92,172
  97,684
Operating income, $m
  7,883
  12,778
  16,167
  20,028
  24,370
  29,195
  34,501
  40,281
  46,528
  53,231
  60,379
  69,468
  77,475
  85,900
  94,737
  103,982
  113,634
  123,695
  134,171
  145,068
  156,398
  168,173
  180,409
  193,125
  206,341
  220,082
  234,372
  249,240
  264,717
  280,835
  297,628
EBITDA, $m
  8,385
  15,178
  18,779
  22,882
  27,495
  32,622
  38,260
  44,402
  51,040
  58,162
  65,757
  73,813
  82,322
  91,274
  100,664
  110,487
  120,743
  131,434
  142,565
  154,144
  166,182
  178,693
  191,695
  205,206
  219,250
  233,850
  249,034
  264,833
  281,277
  298,403
  316,247
Interest expense (income), $m
  244
  556
  836
  1,161
  1,531
  1,947
  2,410
  2,918
  3,472
  4,071
  4,714
  5,399
  6,126
  6,893
  7,701
  8,548
  9,434
  10,359
  11,324
  12,328
  13,373
  14,459
  15,587
  16,760
  17,979
  19,246
  20,563
  21,933
  23,358
  24,842
  26,387
Earnings before tax, $m
  8,012
  12,222
  15,331
  18,867
  22,839
  27,248
  32,091
  37,363
  43,056
  49,160
  55,665
  64,069
  71,350
  79,007
  87,036
  95,434
  104,200
  113,336
  122,847
  132,740
  143,025
  153,714
  164,821
  176,364
  188,362
  200,836
  213,809
  227,307
  241,359
  255,993
  271,241
Tax expense, $m
  2,021
  3,300
  4,139
  5,094
  6,167
  7,357
  8,665
  10,088
  11,625
  13,273
  15,030
  17,299
  19,264
  21,332
  23,500
  25,767
  28,134
  30,601
  33,169
  35,840
  38,617
  41,503
  44,502
  47,618
  50,858
  54,226
  57,728
  61,373
  65,167
  69,118
  73,235
Net income, $m
  5,991
  8,922
  11,191
  13,773
  16,672
  19,891
  23,427
  27,275
  31,431
  35,887
  40,635
  46,770
  52,085
  57,675
  63,536
  69,667
  76,066
  82,735
  89,678
  96,900
  104,408
  112,211
  120,320
  128,746
  137,504
  146,610
  156,080
  165,934
  176,192
  186,875
  198,006

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  8,938
  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
  64,035
  69,245
  85,670
  104,387
  125,435
  148,825
  174,545
  202,566
  232,847
  265,338
  299,987
  336,743
  375,560
  416,400
  459,236
  504,049
  550,838
  599,611
  650,391
  703,215
  758,135
  815,213
  874,528
  936,167
  1,000,234
  1,066,841
  1,136,113
  1,208,187
  1,283,210
  1,361,339
  1,442,743
Adjusted assets (=assets-cash), $m
  55,097
  69,245
  85,670
  104,387
  125,435
  148,825
  174,545
  202,566
  232,847
  265,338
  299,987
  336,743
  375,560
  416,400
  459,236
  504,049
  550,838
  599,611
  650,391
  703,215
  758,135
  815,213
  874,528
  936,167
  1,000,234
  1,066,841
  1,136,113
  1,208,187
  1,283,210
  1,361,339
  1,442,743
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  21,317
  26,809
  33,168
  40,415
  48,564
  57,619
  67,577
  78,426
  90,150
  102,729
  116,143
  130,374
  145,402
  161,214
  177,799
  195,149
  213,264
  232,147
  251,807
  272,258
  293,521
  315,620
  338,584
  362,448
  387,252
  413,040
  439,860
  467,764
  496,810
  527,059
  558,575
Working capital, $m
  6,267
  -3,358
  -4,155
  -5,063
  -6,083
  -7,218
  -8,465
  -9,824
  -11,293
  -12,868
  -14,549
  -16,331
  -18,214
  -20,195
  -22,272
  -24,445
  -26,715
  -29,080
  -31,543
  -34,105
  -36,768
  -39,536
  -42,413
  -45,402
  -48,509
  -51,740
  -55,099
  -58,595
  -62,233
  -66,022
  -69,970
Total debt, $m
  15,882
  23,882
  33,163
  43,738
  55,630
  68,845
  83,377
  99,209
  116,318
  134,675
  154,251
  175,019
  196,950
  220,025
  244,227
  269,547
  295,982
  323,539
  352,230
  382,076
  413,105
  445,355
  478,867
  513,693
  549,891
  587,524
  626,663
  667,385
  709,772
  753,915
  799,909
Total liabilities, $m
  31,123
  39,123
  48,404
  58,979
  70,871
  84,086
  98,618
  114,450
  131,559
  149,916
  169,492
  190,260
  212,191
  235,266
  259,468
  284,788
  311,223
  338,780
  367,471
  397,317
  428,346
  460,596
  494,108
  528,934
  565,132
  602,765
  641,904
  682,626
  725,013
  769,156
  815,150
Total equity, $m
  32,912
  30,122
  37,266
  45,408
  54,564
  64,739
  75,927
  88,116
  101,288
  115,422
  130,494
  146,483
  163,368
  181,134
  199,767
  219,262
  239,615
  260,831
  282,920
  305,899
  329,789
  354,618
  380,420
  407,233
  435,102
  464,076
  494,209
  525,561
  558,196
  592,182
  627,593
Total liabilities and equity, $m
  64,035
  69,245
  85,670
  104,387
  125,435
  148,825
  174,545
  202,566
  232,847
  265,338
  299,986
  336,743
  375,559
  416,400
  459,235
  504,050
  550,838
  599,611
  650,391
  703,216
  758,135
  815,214
  874,528
  936,167
  1,000,234
  1,066,841
  1,136,113
  1,208,187
  1,283,209
  1,361,338
  1,442,743
Debt-to-equity ratio
  0.483
  0.790
  0.890
  0.960
  1.020
  1.060
  1.100
  1.130
  1.150
  1.170
  1.180
  1.190
  1.210
  1.210
  1.220
  1.230
  1.240
  1.240
  1.240
  1.250
  1.250
  1.260
  1.260
  1.260
  1.260
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
Adjusted equity ratio
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,991
  8,922
  11,191
  13,773
  16,672
  19,891
  23,427
  27,275
  31,431
  35,887
  40,635
  46,770
  52,085
  57,675
  63,536
  69,667
  76,066
  82,735
  89,678
  96,900
  104,408
  112,211
  120,320
  128,746
  137,504
  146,610
  156,080
  165,934
  176,192
  186,875
  198,006
Depreciation, amort., depletion, $m
  502
  2,400
  2,612
  2,854
  3,125
  3,427
  3,759
  4,121
  4,512
  4,931
  5,378
  4,346
  4,847
  5,374
  5,927
  6,505
  7,109
  7,738
  8,394
  9,075
  9,784
  10,521
  11,286
  12,082
  12,908
  13,768
  14,662
  15,592
  16,560
  17,569
  18,619
Funds from operations, $m
  2,048
  11,323
  13,804
  16,627
  19,798
  23,318
  27,186
  31,396
  35,942
  40,817
  46,013
  51,116
  56,932
  63,049
  69,463
  76,172
  83,175
  90,474
  98,072
  105,976
  114,192
  122,732
  131,606
  140,828
  150,413
  160,378
  170,742
  181,526
  192,752
  204,443
  216,625
Change in working capital, $m
  -3,526
  -689
  -797
  -908
  -1,021
  -1,134
  -1,247
  -1,359
  -1,469
  -1,576
  -1,680
  -1,783
  -1,883
  -1,981
  -2,077
  -2,173
  -2,269
  -2,365
  -2,463
  -2,562
  -2,663
  -2,768
  -2,877
  -2,989
  -3,107
  -3,230
  -3,360
  -3,495
  -3,638
  -3,789
  -3,948
Cash from operations, $m
  5,574
  12,011
  14,600
  17,534
  20,819
  24,453
  28,433
  32,755
  37,411
  42,393
  47,694
  52,899
  58,815
  65,030
  71,540
  78,345
  85,444
  92,839
  100,535
  108,538
  116,856
  125,500
  134,482
  143,817
  153,520
  163,608
  174,102
  185,022
  196,391
  208,232
  220,573
Maintenance CAPEX, $m
  0
  -711
  -894
  -1,106
  -1,347
  -1,619
  -1,921
  -2,253
  -2,614
  -3,005
  -3,424
  -3,871
  -4,346
  -4,847
  -5,374
  -5,927
  -6,505
  -7,109
  -7,738
  -8,394
  -9,075
  -9,784
  -10,521
  -11,286
  -12,082
  -12,908
  -13,768
  -14,662
  -15,592
  -16,560
  -17,569
New CAPEX, $m
  -523
  -5,493
  -6,359
  -7,247
  -8,149
  -9,056
  -9,958
  -10,849
  -11,724
  -12,579
  -13,415
  -14,230
  -15,029
  -15,812
  -16,584
  -17,350
  -18,115
  -18,883
  -19,660
  -20,452
  -21,263
  -22,099
  -22,964
  -23,864
  -24,804
  -25,788
  -26,820
  -27,904
  -29,046
  -30,249
  -31,517
Cash from investing activities, $m
  -10,916
  -6,204
  -7,253
  -8,353
  -9,496
  -10,675
  -11,879
  -13,102
  -14,338
  -15,584
  -16,839
  -18,101
  -19,375
  -20,659
  -21,958
  -23,277
  -24,620
  -25,992
  -27,398
  -28,846
  -30,338
  -31,883
  -33,485
  -35,150
  -36,886
  -38,696
  -40,588
  -42,566
  -44,638
  -46,809
  -49,086
Free cash flow, $m
  -5,342
  5,808
  7,347
  9,182
  11,323
  13,778
  16,555
  19,654
  23,073
  26,809
  30,855
  34,797
  39,440
  44,371
  49,582
  55,068
  60,824
  66,847
  73,136
  79,692
  86,518
  93,617
  100,998
  108,666
  116,634
  124,912
  133,514
  142,456
  151,753
  161,423
  171,488
Issuance/(repayment) of debt, $m
  15,971
  8,000
  9,280
  10,575
  11,892
  13,215
  14,532
  15,832
  17,109
  18,357
  19,577
  20,767
  21,932
  23,075
  24,202
  25,320
  26,436
  27,557
  28,691
  29,846
  31,030
  32,249
  33,513
  34,826
  36,198
  37,633
  39,139
  40,722
  42,388
  44,143
  45,993
Issuance/(repurchase) of shares, $m
  -7,062
  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  
  8,827
  8,000
  9,280
  10,575
  11,892
  13,215
  14,532
  15,832
  17,109
  18,357
  19,577
  20,767
  21,932
  23,075
  24,202
  25,320
  26,436
  27,557
  28,691
  29,846
  31,030
  32,249
  33,513
  34,826
  36,198
  37,633
  39,139
  40,722
  42,388
  44,143
  45,993
Total cash flow (excl. dividends), $m
  3,451
  13,809
  16,627
  19,757
  23,215
  26,993
  31,087
  35,486
  40,182
  45,166
  50,431
  55,564
  61,372
  67,446
  73,784
  80,388
  87,260
  94,404
  101,827
  109,538
  117,547
  125,867
  134,510
  143,493
  152,832
  162,545
  172,653
  183,177
  194,140
  205,566
  217,481
Retained Cash Flow (-), $m
  -3,070
  -6,148
  -7,145
  -8,142
  -9,156
  -10,175
  -11,188
  -12,189
  -13,172
  -14,134
  -15,072
  -15,989
  -16,885
  -17,766
  -18,633
  -19,494
  -20,353
  -21,216
  -22,089
  -22,979
  -23,890
  -24,829
  -25,802
  -26,813
  -27,869
  -28,974
  -30,133
  -31,352
  -32,635
  -33,986
  -35,411
Prev. year cash balance distribution, $m
 
  8,938
  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
 
  16,599
  9,483
  11,616
  14,059
  16,819
  19,898
  23,296
  27,010
  31,033
  35,359
  39,575
  44,486
  49,680
  55,151
  60,894
  66,907
  73,188
  79,738
  86,560
  93,657
  101,038
  108,708
  116,679
  124,963
  133,571
  142,520
  151,825
  161,505
  171,580
  182,070
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
 
  15,915
  8,681
  10,109
  11,576
  13,037
  14,441
  15,739
  16,882
  17,827
  18,537
  18,794
  18,984
  18,889
  18,515
  17,877
  17,002
  15,924
  14,684
  13,328
  11,901
  10,451
  9,020
  7,647
  6,365
  5,196
  4,158
  3,259
  2,499
  1,873
  1,371
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 42.1
Price to Sales 16.7
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 45.2
Price to Free Cash Flow 49.9
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.3%
Cap. Spend. - 3 Yr. Gr. Rate 2.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 48.3%
Total Debt to Equity 48.3%
Interest Coverage 34
Management Effectiveness
Return On Assets 11.9%
Ret/ On Assets - 3 Yr. Avg. 14.3%
Return On Total Capital 15.2%
Ret/ On T. Cap. - 3 Yr. Avg. 19.1%
Return On Equity 19.1%
Return On Equity - 3 Yr. Avg. 20.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 58.1%
EBITDA Margin - 3 Yr. Avg. 63.9%
Operating Margin 52.3%
Oper. Margin - 3 Yr. Avg. 59.4%
Pre-Tax Margin 53.1%
Pre-Tax Margin - 3 Yr. Avg. 59.6%
Net Profit Margin 39.7%
Net Profit Margin - 3 Yr. Avg. 42.7%
Effective Tax Rate 25.2%
Eff/ Tax Rate - 3 Yr. Avg. 28.2%
Payout Ratio 22.5%

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 $15082 million for the last fiscal year's total revenue generated by VISA Cl A. The default revenue input number comes from 2016 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 25.8% 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 34.7%.

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 141.3%.

Life of production assets of 69.2 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 -17.7%. 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 - $32912 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 2289.6 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 $246.2 billion.

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COMPANY NEWS

▶ Visa raises dividend rate by 18%   [Oct-18-17 04:13PM  MarketWatch]
▶ 3 Financial Stocks for Your Radar   [Oct-17-17 06:16PM  Motley Fool]
▶ Visa Inc (V) Stock Is Not Cheap but It Still Is a Buy   [Oct-13-17 06:36AM  InvestorPlace]
▶ Visa Stock Is Not Worth $120 Right Now   [10:55AM  Investopedia]
▶ The 3 Best Buffett Stocks for Retirees   [06:39AM  Motley Fool]
▶ 3 Embarrassingly Low Dividend Stocks   [Oct-10-17 09:10AM  Motley Fool]
▶ Pence NFL exit could cost taxpayers $200K   [10:27AM  Yahoo Finance Video]
▶ Turkey's Lasting Lira Pain   [08:36AM  Bloomberg]
▶ Costco Slides Despite Posting a Solid Q4 Beat   [Oct-06-17 05:15PM  Investopedia]
▶ Kashkari Should Top Trump's List For Fed Chair   [Oct-05-17 08:20PM  Forbes]
▶ Is Visa Inc. a Buy?   [08:32AM  Motley Fool]
▶ 2 Growth Stocks for Retirees   [10:37AM  Motley Fool]
▶ NFL does not require players to stand for the anthem   [10:54AM  Yahoo Finance Video]
▶ ETFs with exposure to Visa, Inc. : September 28, 2017   [Sep-28-17 10:21AM  Capital Cube]
▶ Equifax CEO Richard Smith is out   [Sep-26-17 10:30AM  Yahoo Finance Video]
▶ How the 4 Newest Dow Stocks Have Surprised Investors   [Sep-25-17 07:45PM  Motley Fool]
▶ Visa, Microsoft Sink DJIA Monday   [04:01PM  24/7 Wall St.]
▶ Understanding Visas Premium Valuations   [09:11AM  Market Realist]
▶ Analyzing Visas Assets and Liabilities   [07:41AM  Market Realist]
▶ How Visa Managed to Reduce Total Operating Expenses   [Sep-22-17 05:37PM  Market Realist]
▶ Why Visas Net Operating Revenues Rose   [03:36PM  Market Realist]
▶ 3 Stocks for Retirees in the 21st Century   [08:38AM  Motley Fool]
▶ PayPal Has a Tremendous Advantage Over Visa   [Sep-21-17 01:31PM  GuruFocus.com]
▶ Singles vs. Couples: Who is more money savvy?   [Sep-19-17 01:25PM  Yahoo Finance Video]
▶ 3 Growth Stocks for Nest-Egg Building   [06:02AM  Motley Fool]
▶ Top Equifax executives "retire" after data breach   [Sep-18-17 11:19AM  Yahoo Finance Video]
▶ My Visa Long Is Getting Long in the Tooth   [Sep-15-17 03:54PM  GuruFocus.com]
▶ Google slapped with gender pay discrimination suit   [11:38AM  Yahoo Finance Video]
▶ Why tech stocks are giving financials a tough time: NYSE trader   [Sep-14-17 02:43PM  Yahoo Finance Video]
▶ Is There Now An Opportunity In Visa Inc (V)?   [Sep-13-17 03:19PM  Simply Wall St.]
▶ Hawaii says it's 1st state to go cashless for pot sales   [Sep-12-17 10:06PM  Associated Press]
▶ Football advertisers respond to controversies   [01:15PM  Yahoo Finance Video]
▶ Equifax shares plummet on announcement of massive data breach   [Sep-08-17 01:14PM  Yahoo Finance Video]
▶ MOVES- Evercore, Visa, JPMorgan, Lazard, Citigroup   [Sep-07-17 05:08PM  Reuters]
▶ Groupon now offering discreet, couponless restaurant deals   [04:05PM  American City Business Journals]
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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