Will Visa (V) Stock Be Helped by Swatch Smartwatch Partnership? - TheStreet

NEW YORK (TheStreet) -- Visa (V) - Get Report  stock is down 0.68% to $79.30 in mid-morning trading on Monday, after the payments technology announced a partnership with Swiss watchmaker Swatch Group. 

The San Francisco-based company is teaming up with Swatch on the company's new "Swatch Bellamy" smartwatch.

Visa cardholders will be able to "tap and pay" using the watch starting in early 2016, Swatch said in a statement on Monday.

"Like a prepaid bankcard, a Swatch Bellamy watch allows customers to pay for items using merchants' contactless POS terminals," Swatch said. "Pay-by-the-wrist transactions require absolutely no energy at all from the watch itself, meaning customers can expect the usual battery life of a Swatch."

The watch will be available in the U.S., Switzerland and Brazil, the company added. 

Swatch has projected that sales of traditional watches will decline by around $2 billion this year, the Wall Street Journal reports. 

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, impressive record of earnings per share growth, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

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

  • The revenue growth greatly exceeded the industry average of 27.0%. Since the same quarter one year prior, revenues rose by 10.6%. 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 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VISA INC has improved earnings per share by 44.2% 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 $2.57 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $2.57).
  • The gross profit margin for VISA INC is rather high; currently it is at 67.57%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 42.34% significantly outperformed against the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: V

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.