NEW YORK (TheStreet) -- Visa (V) - Get Report stock is advancing by 1.73% to $78.38 in pre-market trading on Monday, as the USAA, one of the biggest debit and credit card issuers, moves its portfolio to Visa from MasterCard (MA).
The USAA is the 10th-largest credit-card issuer, and had $17.53 billion in outstanding loans as of June 30, according to the Wall Street Journal. The company serves military members and their families.
The card issuer has worked with MasterCard for roughly 30 years, but is switching payment networks because Visa offers more benefits, such as no foreign transactions fees for USAA Visa credit cards in 2016, according to a statement.
Most of the cards will be changed next year, according to the USAA website.
Financial details of the deal were not disclosed.
Separately, 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, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 26.8%. Since the same quarter one year prior, revenues rose by 11.5%. 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- VISA INC has improved earnings per share by 27.2% 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 $2.15 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.62 versus $2.15).
- The gross profit margin for VISA INC is rather high; currently it is at 67.99%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 48.23% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to $2,111.00 million or 8.70% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.94%.
- You can view the full analysis from the report here: V