Image Source: DepositPhoto As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that is not currently in our screens, Visa Inc (V).
ProfileVisa is the largest payment processor in the world. In fiscal 2023, it processed almost $15 trillion in total volume. Visa operates in over 200 countries and processes transactions in over 160 currencies. Its systems are capable of processing over 65,000 transactions per second.
Recent PerformanceOver the past twelve months the share price is up 22.23%.
Source: Google Finance
Inputs
Forecasted Free Cash Flows (FCFs)
Terminal ValueTerminal Value = FCF * (1 + g) / (r – g) = 670.14 billion
Present Value of Terminal ValuePV of Terminal Value = Terminal Value / (1 + WACC)^5 = 456.09 billion
Present Value of Free Cash FlowsPresent Value of FCFs = ∑ (FCF / (1 + r)^n) = 130.29 billion
Enterprise ValueEnterprise Value = Present Value of FCFs + Present Value of Terminal Value = 586.37 billion
Net DebtNet Debt = Total Debt – Total Cash = 2.90 billion
Equity ValueEquity Value = Enterprise Value – Net Debt = 583.47 billion
Per-Share DCF ValuePer-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $254.46
Conclusion
Based on the DCF valuation, the stock is overvalued. The DCF value of $254.46 share is lower than the current market price of $276.82. The Margin of Safety is -8.79%.More By This Author:Stock Screener Analysis: Why Andersons Inc. Stock Is A BuyWarren Buffett: The Hidden Costs of High Stock Market ActivityWhy eBay Inc Stock Is A Buy? Acquirer’s Multiple Stock Screener Analysis
