Visa Keeps Charging Ahead

Visa (V)
continues to do well. It has risen since its IPO at $44 on 19 March to
reach a high of $89.94 earlier this month and now trades slightly down
from that level. Though the stock is probably not undervalued at its
current price of $82.86, it still offers the prospect of steady gains
in the long-term. If nothing else, it also seems to be the subject of
some strong debate.

At its earnings conference call on
April 28th, Visa reported a 48% increase in net income for the first quarter
of 2008. Quarterly earnings per share were $0.39, or $0.52 when
adjusted to exclude litigation, restructuring, and purchase
amortization. Payment volume grew to $681 billion, 19% over the prior
year. For the six months ending March 31, 2008, earnings per share were
$0.93, or $1.08 when similarly adjusted. Visa indicated that it expects
annual revenues to grow 11-15% over the next three years, with
operating margins running at around 40%. Earnings per share should grow
at 20% or greater. Annual free cash flow should exceed $1 billion.

After
some mixed trading following the earnings announcement, Visa shares resumed
their upward trend; they have only recently pulled back a little.