Visa Could Underwhelm Mastercard (Technical Analysis) (NYSE:V)

Introduction

Visa (NYSE:V) is one of the largest credit card processing companies in the world. As new industry competitors with innovation continue, V is reasonably above average for stock price uptrend potential. Its future performance is underwhelming compared to its competition.

Fundamental not as strong as competitors

Ratios

The current and quick ratios for Visa have been quite mixed over the last five years. There is no growing trend here, unlike in other similar stocks of the same category.

Unnamed: 0	2018	2019	2020	2021	2022
Period	FY	FY	FY	FY	FY
Current ratio	1.611	1.563	1.905	1.754	1.448
Quick ratio	1.283	1.242	1.580	1.413	1.078
Cash ratio	0.722	0.584	1.123	1.048	0.752
Days of sales outstanding	49.413	72.914	48.152	56.419	49.215

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Source: Financial Modelling Prep

Growth

As in the ratios section, Visa’s stock price has been reasonably flat, with weak revenue growth. It is a different story when this year proves to be the strongest for this stock.

Unnamed: 0	2018	2019	2020	2021	2022
Period	FY	FY	FY	FY	FY
Revenue growth	0.123	0.115	-0.049	0.103	0.216
Gross profit growth	0.109	0.123	-0.079	0.104	0.232
EPS growth	0.582	0.201	-0.079	0.149	0.247

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Source: Financial Modelling Prep

Data

Despite previous years, Visa had a reasonably strong year in 2022. Unlike most other stocks, a simple moving average of 20 days of performance is average compared to different stock prices. The positive highlight is how the SMA 50 and 200 returns were positive.

Unnamed: 0	Values
SMA20	9.05%
SMA50	7.23%
SMA200	0.29%

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Source: FinViz

Enterprise

Unfortunately for a Visa, the most robust year was in 2021, while the 2nd strongest year for the stock price was this year. Last year’s market capitalization peaked but is slightly stronger than in 2018 to 2020.

Unnamed: 0	2018	2019	2020	2021	2022
Symbol	V	V	V	V	V
Stock price	132.760	179.250	181.710	211.770	190.710
Number of shares	2.239 B	2.189 B	2.140 B	2.130 B	2.130 B
Market capitalization	297.290 B	392.432 B	388.914 B	451.134 B	406.270 B
Enterprise value	305.758 B	401.323 B	396.695 B	455.624 B	413.031 B

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Source: Financial Modelling Prep

Estimate

For guidance, estimates show decent growth in the dividend while earning price ratio is manageable. EBITDA has steadily grown the same as well as net profit.

YEARLY ESTIMATES	2022	2023	2024	2025	2026
Revenue	–	32,023	35,892	40,042	41,296
Dividend	1.47	1.73	1.95	2.14	2.30
Dividend Yield (in %)	0.71 %	0.83 %	0.94 %	1.03 %	1.10 %
EPS	–	8.32	9.67	11.21	12.30
P/E Ratio	27.44	25.03	21.54	18.58	16.93
EBIT	–	21,729	24,625	27,883	30,036
EBITDA	20,485	22,609	25,295	28,831	29,547
Net Profit	–	17,333	19,657	22,284	22,756

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Source: BusinessInsider

Technical Analysis shows a downward mean reverting action.

Fibonacci

Visa shows a lot of volatility in its price, with the latest price attempting to trend up. Based on the recent pricing patterns since March, the latest price trend is expected to turn into a downtrend. Overall, you can see the general decline in price despite volatility. The trend line of the Fibonacci may start to decline as momentum in price gets more robust in each pricing wave with volatility.

MACD

As the most recent price action of Visa has crossed the zero line, this is expected to be a missed opportunity for the most recent uptrend. As explained in the RSI, one can expect the stock price for Visa to drop back into its usual mean reverting trend since the stock price peak of last year.

RSI

Based on recent pricing trends with volatile waves, it could be expected that the price will decline as, most recently, the Visa stock price has exceeded the overbought market condition.

Monte Carlo

Monte Carlo simulation shows more upward trending prediction paths, representing higher stock price expectations. Meanwhile, the normalized distribution chart also indicates a higher probability for Visa stock price in the coming weeks. This is based on the historical momentum of the most recent upward-trending stock price.

Regression

The forecasted 30-day regression red line shows that the Visa stock price appears to go flat, which could be reasonable based on the current overbought RSI market condition.

Insider has more selling activity versus competition.

Risk is muted but beware of other market analyst calls

Insider Stats

For some reason, certain executives decided to sell this stock, but it is not high profile nor a high quantity number of shares, so it might not be a concern.

Unnamed: 0

X

Filing Date

Trading Date

Ticker

Insider

Title

Trade Type

Price

Quantity

Owned

Delta Own

Value

0

D

2022-09-30 16:07:35

2022-09-29

V

Kelly Alfred F Jr

COB, CEO

S – Sale+OE

$180.00

-6,000

153,887

-4%

-$1,080,000

1

D

2022-09-01 16:14:58

2022-08-31

V

Kelly Alfred F Jr

COB, CEO

S – Sale+OE

$201.00

-9,000

153,887

-6%

-$1,809,000

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Recommendation

Just like insider trading activity which points to nothing but sales, also you will find market analysts pushing a sell recommendation with a few neutral ones. As explained in the RSI section, it could be described as the stock price hitting an overbought market condition.

Interval	Recommendation	BUY	SELL	NEUTRAL
One month	SELL	2	15	9
One week	SELL	5	11	10
One day	NEUTRAL	8	9	9

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Source: Trading View

Conclusion

When you compare Visa against its primary competitor Mastercard (MA), you can quickly see how Visa underperforms. From the deep analysis of Mastercard, one should consider it for its explosive dividend income potential. Visa seems to have an underperforming performance versus its competitor. Although the growth estimate shows some upward pricing momentum in the stock, it might be wise to look at other companies in the same financial services space. As a result, V gets a hold rating.