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Visa's Stock Is Expensive and as Cold as Russia's Winter

NEW YORK (TheStreet) -- Visa (V - Get Report) reminds us in its advertisements its cards are "everywhere you want to be." Unless you are in Russia, which has been hit with U.S. and European sanctions because of its actions backing rebels in eastern Ukraine.

But while Visa has over two billion branded cards in circulation accepted at 30 million global locations, investors are nowhere to be found. The company reports fiscal third-quarter earnings Wednesday.

Shares, at $221 currently, are expensive while being down nearly 1% for the year to date. There are much better places to put your money.

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Visa is a well-run company. Shares have gained 230% in the past five years. But management has no control over geopolitical issues. Like rival MasterCard (MC), Visa's volume is being hurt by sanctions in Russia. There are no signs that a resolution will be reached anytime soon.

Back in April, management warned analysts future revenue would be adversely affected from those Russia sanctions. Byron Pollitt, Visa's CFO, said:

"We have 100 million cards [in Russia] and it is not in anyone's best interest, inclusive of the Russians, to make those cards not available to their own citizens."

Calls and emails to Visa requesting additional comment on this situation were not immediately returned.

With the company having processed close to 90 billion transactions totaling $7 trillion in 2013, Visa's global presence spans far greater than Russian territory. But the country is still very important to Visa, which relies on international markets for 45% of its business. Consider, in 2013, Visa processed roughly 60% of the payment card volumes in Russia.

Visa ended relationships with two Russian banks in April, which caused weakness in cross-border payment volumes. Unless these banking relationships were restored during the quarter and/or Visa added additional banks to offset the loss, there's a good chance Visa will miss on its revenue numbers Wednesday.

Whether or not it meets or beats on its earnings depends on how well management has adjusted. This is because part of management's lowered guidance assumed "several pennies of earnings per share impact" from the sanctions in Russia, according to Byron Pollitt.

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