Visa (V) is trading at a new all-time high after the company reported better than expected fourth quarter results and gave encouraging guidance for fiscal 2018 this morning.
Visa owns a global payment network. Unlike American Express (AXP) and Discover (DFS), which own payment networks and issue credit, Visa doesn't take any credit risk -- Capital One (COF) is a bank that issues a lot of credit cards. Visa is a technology company in the financial sector, just like MasterCard (MA).
Visa has missed earnings estimates just two times since its IPO nine years ago. The stock is up over 600% since the IPO. The company has also beat on the top line five quarters in a row.
Visa has been and will continue to ride the secular shift to digital payments.
Fiscal 2017 earnings grew 23% to $3.48/share as net revenue grew 22% to $18.4 billion. Growth was driven by inclusion of Visa Europe and continued growth in payments volume, cross-border volume and processed transactions.
For fiscal 2018, Visa expects adjusted EPS growth at the high end of mid-teens range with net revenue growth in the high single digits.
Visa and its peer Mastercard (MA) are evidence that strong top line growth combined with healthy operating margins are a good recipe for long-term capital gains.