Why Visa Stock Is Attractive Despite Potential Regulation
Visa cards are seen in this illustration photo taken in Krakow, Poland on March 29, 2024. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
NurPhoto via Getty Images
Visa (V) stock might be an excellent purchase at this time. Why? Because it offers high margins – indicative of pricing power and the ability to generate cash – at a discounted price. Companies of this nature produce consistent, predictable profits and cash flows, which mitigates risk and facilitates capital reinvestment. The market typically favors that. Separately, see Nvidia Hands Over Nearly $100 Billion To Shareholders.
What Is Happening With Visa
Visa may be down -6.5% this year, but the silver lining is that it is currently 43% cheaper based on its P/S (Price-to-Sales) ratio compared to a year ago.
While the stock may not yet show it, here’s what’s going positively for the company. In Q4 2025, data processing revenue increased by 17%, along with a 12% rise in higher-margin cross-border volume, fueled by robust consumer spending. Processed transactions grew by 10%, demonstrating enhanced network utility. Revenue from value-added services rose by 25% due to new partnerships and technological investments, including upgrades to next-gen VisaNet. The company anticipates low double-digit net revenue growth for FY2026, with global events like the Olympics offering added support.
Visa is an attractive buy because it dominates the global shift from cash to digital payments with an unmatched network, operating in over 200 countries and benefiting from powerful network effects. Its asset-light model delivers exceptional margins and strong free cash flow, supporting consistent buybacks and dividends, while growth drivers like cross-border travel, contactless payments, and B2B transactions remain intact. With no credit risk, resilient earnings, and durable long-term growth, Visa offers a rare mix of stability and compounding potential.
V Has Strong Fundamentals
- Recent Profitability: Approximately 57.6% operating cash flow margin and 66.4% operating margin LTM.
- Long-Term Profitability: Roughly 58.9% operating cash flow margin and 66.8% operating margin over the last 3-year average.
- Revenue Growth: Visa experienced growth of 11.3% LTM and 10.9% over the last 3-year average, yet this is not a growth narrative.
- Available At Discount: With a P/S multiple of 10.6, V stock is currently selling at a 43% discount compared to one year ago.
Below is a brief comparison of V’s fundamentals against S&P medians.
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*LTM: Last Twelve Months
Don’t Expect A Slam Dunk, Though
Even if V stock appears to be a promising investment opportunity, it’s essential to recognize a stock’s history of downturns. Visa is not exempt from challenging periods either. It dropped approximately 52% during the Global Financial Crisis, incurred a 36% loss during the Covid downturn, and fell nearly 29% in the inflation shock of 2022. The 2018 correction also saw it decrease by nearly 19%.
While it might seem robust on paper, these declines illustrate that it can still experience setbacks along with the broader market during turbulent times. However, the risk is not confined to significant market crashes. Stocks can fall even in favorable market conditions – consider events like earnings announcements, business updates, or changes in outlook. Check V Dip Buyer Analyses to observe how the stock has rebounded from significant declines in the past.
If you seek more information, read Buy or Sell V Stock.
How We Arrived At V Stock
V captured our attention because it satisfies the following criteria:
- Market capitalization exceeding $10 Billion
- High CFO (cash flow from operations) margins or operating margins
- Significantly declined in valuation over the past year
However, if V does not appear appealing enough for you, here are other stocks that also meet all these criteria:
Notably, a portfolio established beginning on 12/31/2016, containing stocks that fulfill the above criteria, would have performed as follows:
- Average 12-month forward returns of nearly 19%
- 12-month win rate (percentage of selections returning positive) of approximately 72%
A Multi-Asset Portfolio Beats Picking Stocks Alone
Stocks can rise and fall, but bonds, commodities, and other assets help stabilize performance. A multi-asset portfolio maintains steadier returns and lowers the risk associated with any single market.
The asset allocation framework from Trefis’ Boston-based wealth management partner produced positive returns during the 2008-09 period when the S&P lost over 40%. Our partner’s strategy now incorporates the Trefis High Quality Portfolio, which boasts a history of comfortably outperforming its benchmark, which includes all three indices: the S&P 500, S&P mid-cap, and Russell 2000.