Visa (V) Bench

1,042 views

Published on

0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,042
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
20
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Visa (V) Bench

  1. 1. Penn State Investment AssociationInformation Technology Sector<br />VISA<br />Joseph Eirkson, Matt Lochansky, Katie Lally<br />The Nittany Lion Fund, LLC.<br />
  2. 2. Team Recommendation: Bench<br />Top Three Reasons for Bench:<br />
  3. 3. Company Description<br /><ul><li>Visa is a global payments technology company offering a diverse range of products and services:
  4. 4. Debit, Credit, Pre-Paid and Cash Access
  5. 5. Connects consumers, businesses, banks and governments by enabling them to use digital currency instead of paper currency
  6. 6. Provides transactions based services to financial institutions and merchant customers through VisaNet processing
  7. 7. Value-added services:
  8. 8. Risk management
  9. 9. Fraud protection
  10. 10. Loyalty and dispute management
  11. 11. Debit issuer processing
  12. 12. Operates an open-loop payment network
  13. 13. Connecting financial institutions and managing information</li></ul>3<br />
  14. 14. Revenue Breakdown<br />Geographic Breakdown<br />Segment Breakdown<br />
  15. 15. International Growth<br /><ul><li>Expansion through Small, Medium and Large Businesses
  16. 16. Visa purchasing platform streamlines:
  17. 17. Paper Intensive Purchase Orders
  18. 18. Invoice Processing
  19. 19. Increased number of cards issued:
  20. 20. Over 1.8 billion Visa cards issued
  21. 21. Only 988 million for MasterCard
  22. 22. More Cards More transactions More payments
  23. 23. 35% increase in International Consumer Debit Nominal Payments in Q1 2011
  24. 24. Continued increased payment volumes and consumer spending will drive growth</li></li></ul><li>Over-Blown Financial Regulation<br /><ul><li>Dodd-Frank Wall Street Reform Act has been overblown
  25. 25. Visa has traded down 10% over the past year due to potential revenue losses
  26. 26. Latest earnings have shown stellar growth
  27. 27. Revenues up 14%
  28. 28. Net Income up 16%
  29. 29. 15.3 million share repurchase program
  30. 30. Visa has proven strong consistent growth:
  31. 31. Domestically
  32. 32. Internationally (40% of revenues coming from overseas and 60% of growth international)
  33. 33. Recent News:
  34. 34. “Rep Barney Frank said on 4/5/2011 that he supported legislation to delay a rule cracking down on the fees banks charge merchants when a debit card is used.”</li></li></ul><li>Increased Electronic Payment <br /><ul><li>Growth in 2010 operating revenues due to:
  35. 35. Nominal payment volume
  36. 36. 13% growth in nominal payment volume in 2010
  37. 37. Expected growth of 16% in 2011
  38. 38. 15% growth in nominal payments for last 3 months 2010, counting towards Q1 2011
  39. 39. Growth of processed transactions
  40. 40. Data processing revenues increased 28% from 2009 due to 14% growth in transaction processed
  41. 41. 15% growth for last 3 months 2010, counting towards Q1 2011
  42. 42. Includes revenue from CyberSource acquisition (completed July 2010)
  43. 43. Billable Transactions
  44. 44. Increased from 707 million in Q1 2010 to 987 million in Q1 2011
  45. 45. Includes authorization, settlement, fraud management…</li></li></ul><li>Comparable Analysis <br />8<br />
  46. 46. Ratio Analysis <br />9<br />
  47. 47. Five Year Summary<br />10<br />
  48. 48. Growth Analysis & CAGRs<br />11<br />
  49. 49. Projections<br />12<br />
  50. 50. Discounted Cash Flow<br />13<br />
  51. 51. Implied EV/EBITDA Valuation<br />14<br />
  52. 52. Sector Risk<br /><ul><li>Regulation in the Business Services Sub-Sector:
  53. 53. Newly issued laws and pending regulation may decrease payment volume and increase lending costs
  54. 54. Intermingled with Financial Reform:
  55. 55. Negative sentiment towards card issuers
  56. 56. Reduction in consumer and business spending:
  57. 57. Potential downturn in IT infrastructure spending by:
  58. 58. Businesses
  59. 59. Consumers
  60. 60. Visa’s Correlation with the Benchmark is the lowest of any of the current holdings
  61. 61. Visa S5inft is 0.489</li></li></ul><li>Company Risk<br /><ul><li>Visa Europe
  62. 62. Newly independent system as of 2010 that processes it’s own transactions
  63. 63. Wall Street Reform and Consumer Protection Act:
  64. 64. Regulates selection of payment networks by issuers and the routing of debit transactions by retailers
  65. 65. Decreased Electronic Payment Volume
  66. 66. If regulation prevents entrance into new markets payment volume will decrease
  67. 67. Decreases in Consumer Spending
  68. 68. Interchange reimbursement fees
  69. 69. Issues concerning transfer of value</li></li></ul><li>Risk Analysis<br />0 1 2 3 4 5 Notes<br />Financial Regulation<br />Visa Europe<br />5x as Fiserv<br />Meet or Beat Last <br />2 years<br />Beta=.97<br />PlaySpan Inc closed on 3/1/11<br />0 1 2 3 4 5<br />
  70. 70. Sector Strategy<br /><ul><li>Gain exposure to Data Processing & Outsourced Services Sub-Industry through Visa
  71. 71. Replace Fiserv, which primarily serves Financial Institutions to gain more exposure to consumer and business spending, bill payment and electronic funds transfer
  72. 72. More diversified holding through Visa which serves not only Financial Institutions and business but also end consumers</li></ul>Current Allocation<br />Proposed Allocation<br />18<br />
  73. 73. Team Recommendation: Bench<br />Top Three Reasons for Bench:<br />
  74. 74. Appendix – Correlation & Debt Distribution<br />20<br />
  75. 75. Appendix – One Year Stock Chart <br />21<br />
  76. 76. Appendix –P/E & EV/EBITDA<br />22<br />
  77. 77. Questions or Comments?<br />The Future of Payment Is Here<br />

×