Visa Earnings: Solid Finish to a Strong Fiscal Year

Key Morningstar Metrics for Visa

• Fair Value Estimate
  : $330.00
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Visa’s Earnings

Visa’s V fiscal fourth-quarter results largely maintained the trends the company saw in the previous quarter. While growth came down a bit in the back half of the year, the company’s performance remains quite strong.

Why it matters: Net revenue in the quarter increased 13% year-over-year on a constant-currency basis, in line with the third quarter.

• Payments volume growth was 9% year-over-year, roughly in line with recent quarters. On the positive side, constant-currency cross-border volume growth (excluding intra-Europe) picked up modestly to 14%.
• Value-added services have been a big boost for Visa this year, with the company seeing 30% constant-currency growth in fiscal 2026. This is likely to moderate but will remain a key driver, with management expecting growth in the low- to mid-20s range in fiscal 2027.

The bottom line: We will maintain our $330 fair value estimate for the wide-moat company and see shares as modestly overvalued. We think the market is a little too optimistic about the firm’s long-term prospects, given recent results.

• Visa has enjoyed a strong run this year, driven by favorable macro conditions and success in expanding value-added services. While growth slowed as the year progressed, net revenue growth of 15% for the full fiscal year is the best level the company has seen in 15 years (excluding the post-pandemic bounce back). But management’s guidance of low-double-digit net revenue growth in fiscal 2027 suggests growth will start to come back down.
• Adjusted to exclude purchase amortization and one-time items, operating margins (based on net revenue) improved by 30 basis points, as the strong growth Visa has seen this year has been matched by investments to drive that growth. Management’s guidance for fiscal 2027 implies roughly flat adjusted margins, suggesting this offset will continue. Year-over-year growth in client incentives was high at 21% in the quarter.