Visa - 2Q good international growth

On Thursday night Visa released their second quarter results for 2018. It was another good 3 months for the company. Revenues increased 13% whilst earnings per share increased 30%.

Like with any business, volume growth of the products you sell is crucial. And this is certainly happening for Visa. Check the image below, over 2 trillion dollars went through their systems for the quarter, up 13% from the year before. This came from over 43 billion separate transactions using 3.25 billion cards in issue. Nearly enough for every second person on the planet.



As you can see, the international business is growing incredibly well as developing markets adopt this amazing technology.

This all resulted in over $5bn in revenues for the business, $3.3bn in operating income and $2.6bn in net income. Shareholders earned $1.11 per share. Expectations are for the company to earn $4.55 for 2018 and $5.40 for 2019. The stock trades at $121 per share or 22 times 2019 earnings.

The stock market rewards quality. And that is why this business trades at a premium to the general market. It has zero debt, is extremely profitable and is operating in a very favourable environment.

We expect plastic transactions to increase even more than the optimistic consensus. Developing markets will adopt the more convenient methods of payment and developed markets will continue to spend more. Online retail, app based services like Uber, booking.com and Netflix will continue to push business in Visa's direction. We are conviction buy on this company.