Visa Inc. ( V Quick Quote V - Free Report) recently announced a massive share buyback program. In the latest 8-K SEC filing, the financial transaction juggernaut stated that its board of directors has approved a new $12-billion share buyback program. This strategic move will likely boost shareholder value.
In fourth-quarter fiscal 2021, the company bought back shares worth $3.1 billion. As a result, the previous share repurchase program had $4.7 billion remaining at quarter-end. Of that amount, V exhausted $3.5 billion till Dec 15, 2021. The balance of $1.2 billion will be added with the new authorization, bringing the total available fund for buybacks to $13.2 billion. The share repurchase authorization comes with no expiration date.
Share buybacks and dividend hikes are a prudent way of maximizing shareholders’ wealth and generating more value. Visa has increased its dividend each year since 2009, with the latest being a 17% hike this October. V’s latest stock repurchase program indicates its commitment toward delivering a long-term shareholder value and reflects the company’s confidence in its financial position and ability to generate sufficient cash flows.
Speaking of its strong financial position, Visa exited fourth-quarter fiscal 2021 with cash and cash equivalents of $16.5 billion. It has a total debt to capitalization of 35.8%, below the
industry average of 37.7%. It has ample liquidity, with access to the commercial paper market on favorable terms. Also, it has a strong free cash flow position. In the trailing 12-month period, Visa’s free cash flow after dividends increased 63.4% to $12,032 million.
Nonetheless, capital deployment activities are not the only factor to be considered while judging a company. Investors interested in this stock can take a look at its growth opportunities. The company is tapping into the crypto ecosystem to capitalize on the growing crypto market.
Visa recently strengthened its partnership with
Nuvei Corporation ( NVEI Quick Quote NVEI - Free Report) , with the latter announcing the deployment of branded Visa crypto-friendly debit cards in the U.K. and European Economic Area. The move enables Visa to reduce the gap between crypto and traditional finance. Visa is expected to provide a simple and secured path for crypto spendings. This will optimize the crypto ecosystem and digital asset payments and reduce risks, time-to-market, and costs.
Visa’s growing proficiency in the crypto ecosystem and partnership with Nuvei in the huge European market are likely to contribute to top-line growth. Visa seems well poised to capitalize on the prevailing scenario since the global leader in digital payments works closely with more than 60 crypto platforms. Just like Visa, other companies like
Mastercard Incorporated ( MA Quick Quote MA - Free Report) and PayPal Holdings, Inc. ( PYPL Quick Quote PYPL - Free Report) have also made their moves to capitalize on the increasing popularity of cryptocurrencies.
In July 2021, Mastercard collaborated with a series of crypto companies in a bid to unveil a card offering and offer seamless cryptocurrency conversion. MA has been collaborating with cryptocurrency platforms to tap the growing number of consumers entering the crypto space. The company has been pursuing various endeavors to offer seamless cryptocurrency wallets and exchange experience, which result in the shifting of more consumers toward crypto cards for purchasing digital assets or incurring spending. Early November, Mastercard announced a partnership with Amber Group, Bitkub and CoinJar to provide crypto-funded Mastercard payment cards in the Asia Pacific region.
PayPal enables customers to trade crypto assets through its digital wallet. Last year, it launched a service to allow clients to buy, sell and hold cryptocurrency directly from their PayPal account. PYPL has an offering in place named Checkout with Crypto, which is aimed at facilitating seamless online purchases utilizing cryptocurrencies. In August 2021, PayPal unveiled its cryptocurrency service in the U.K., thereby marking its foray into the country’s crypto market.
Price Performance & Zacks Rank
Shares of Visa increased 1.9% in the past year against the industry’s 20% decline.
Image Source: Zacks Investment Research
The company currently has a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here