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Why Visa (V) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Visa Inc. (V - Get Report) are down -3.54% to $201.91 after the payments technology company said economic sanctions against Russia could hurt their profits this year.

The sanctions may trim "several pennies" per share from Visa's fiscal 2014 earnings, said CFO Byron Pollitt said yesterday after the company reported quarterly results, Bloomberg reports.

The U.S. imposed sanctions on more than two dozen individuals and St. Petersburg-based OAO Bank Rossiya, prompting Visa and MasterCard Inc. (MA - Get Report) to stop processing payments for some banks. Russian President Putin responded to the sanctions by recommending that his country create its own payments system and change its laws. He said the two companies will lose market share, Bloomberg noted.

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TheStreet Ratings team rates VISA INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate VISA INC (V) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 20.2%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • V has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, V has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VISA INC has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VISA INC increased its bottom line by earning $7.58 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($8.88 versus $7.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 8.8% when compared to the same quarter one year prior, going from $1,293.00 million to $1,407.00 million.
  • The gross profit margin for VISA INC is rather high; currently it is at 69.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.59% significantly outperformed against the industry average.
  • You can view the full analysis from the report here: V Ratings Report
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