Why Visa (V) Stock Is Up Today

NEW YORK (TheStreet) -- Visa (V) was gaining 0.4% to $222.67 Wednesday after launching the new Visa Checkout online payment system.

The Visa Checkout service aims to make online payments easier by eliminating some steps in the usual process, similar to PayPal (EBAY) and other services. To use the service users can sign up with their Visa credit and debit cards, or any other branded cards, and later pay for items by inputting their username and password.

The first partners to use the Visa Checkout include Neiman Marcus, Pizza Hut (YUM), Staples (SPLS), and United Airlines (UAL). Retailers who used V.me, Visa's previous online payment system will switch to the new service, which the credit card company says has a more recognizable brand and is more streamlined.

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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, impressive record of earnings per share growth, compelling growth 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 came in higher than the industry average of 16.1%. Since the same quarter one year prior, revenues slightly increased by 6.9%. 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • VISA INC has improved earnings per share by 31.3% 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 ($9.00 versus $7.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 25.8% when compared to the same quarter one year prior, rising from $1,270.00 million to $1,598.00 million.
  • The gross profit margin for VISA INC is rather high; currently it is at 68.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 50.52% significantly outperformed against the industry average.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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