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Cash King, Debt Light: Visa's Financial Muscle Tells the Story
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Key Takeaways
Visa cut long-term debt to $19.6B, with leverage below industry and key peers.
Earnings are projected to rise 13.7% in fiscal 2025 and 12.3% the following year.
Visa returned $6B to shareholders last quarter, with $29.8B left in its buyback fund.
Visa Inc. (V - Free Report) maintains a strong financial footing, supported by robust cash reserves and investments that keep its balance sheet healthy. The company’s long-term debt stood at $19.6 billion in the most recent quarter, improving from $20.8 billion at the close of fiscal 2024. With total debt representing 39.4% of capital, Visa remains in a stronger position than the industry average of 44.6%.
At the end of June, cash and cash equivalents climbed to $17.1 billion, up from $12 billion at the end of fiscal 2024. Visa also boasts an exceptional interest coverage ratio of 44.9X, nearly double the industry average of 22.8X, underscoring its capacity to comfortably meet financial obligations. Its cash flow engine is unmatched, producing $18.7 billion in free cash flow during fiscal 2024 and $15.7 billion over the first nine months of fiscal 2025.
This financial strength allows Visa to pursue strategic acquisitions, fund long-term capital projects, and return value to shareholders. Buyouts such as Featurespace and Pismo strengthen its technological edge and reinforce its market leadership. In the June quarter alone, Visa returned $6 billion to shareholders, with $4.8 billion via buybacks and $1.2 billion through dividends. As of June 30, 2025, it still had $29.8 billion remaining in its buyback fund.
Visa’s financial resilience is further reflected in its steady top-line growth, durable margins, and strong returns. Revenue advanced 11.4% in fiscal 2023, 10% in fiscal 2024, and 11.3% in the first nine months of fiscal 2025. Its adjusted operating margin came in at 67.5% last quarter, highlighting extraordinary profitability.
How Are Peers Faring?
Meanwhile, peers like Mastercard Incorporated (MA - Free Report) and American Express Company (AXP - Free Report) have total debt to capital of 70.7% and 64.9%, respectively, significantly above Visa and the industry average. Nevertheless, American Express' integrated model, which incorporates customer lending, is bound to have some weight. Its high-quality receivables, disciplined risk management and solid earnings power make this leverage sustainable.
Mastercard’s free cash flow jumped 24.7% in 2024 to $13.6 billion and 55.5% in the first half of 2025 to $6.4 billion. On the other hand, American Express' free cash flow declined 28.6% in 2024 to $12.1 billion and 10.8% in the first half of 2025 to $8.1 billion.
Visa’s Price Performance, Valuation and Estimates
Shares of Visa have gained 7.2% year to date, outperforming the broader industry but underperforming the S&P 500 Index.
Visa YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Visa trades at a forward price-to-earnings ratio of 26.42X, up from the industry average of 21.54X. Visa carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings implies a 13.7% rise year over year, followed by 12.3% growth next year.
Image: Bigstock
Cash King, Debt Light: Visa's Financial Muscle Tells the Story
Key Takeaways
Visa Inc. (V - Free Report) maintains a strong financial footing, supported by robust cash reserves and investments that keep its balance sheet healthy. The company’s long-term debt stood at $19.6 billion in the most recent quarter, improving from $20.8 billion at the close of fiscal 2024. With total debt representing 39.4% of capital, Visa remains in a stronger position than the industry average of 44.6%.
At the end of June, cash and cash equivalents climbed to $17.1 billion, up from $12 billion at the end of fiscal 2024. Visa also boasts an exceptional interest coverage ratio of 44.9X, nearly double the industry average of 22.8X, underscoring its capacity to comfortably meet financial obligations. Its cash flow engine is unmatched, producing $18.7 billion in free cash flow during fiscal 2024 and $15.7 billion over the first nine months of fiscal 2025.
This financial strength allows Visa to pursue strategic acquisitions, fund long-term capital projects, and return value to shareholders. Buyouts such as Featurespace and Pismo strengthen its technological edge and reinforce its market leadership. In the June quarter alone, Visa returned $6 billion to shareholders, with $4.8 billion via buybacks and $1.2 billion through dividends. As of June 30, 2025, it still had $29.8 billion remaining in its buyback fund.
Visa’s financial resilience is further reflected in its steady top-line growth, durable margins, and strong returns. Revenue advanced 11.4% in fiscal 2023, 10% in fiscal 2024, and 11.3% in the first nine months of fiscal 2025. Its adjusted operating margin came in at 67.5% last quarter, highlighting extraordinary profitability.
How Are Peers Faring?
Meanwhile, peers like Mastercard Incorporated (MA - Free Report) and American Express Company (AXP - Free Report) have total debt to capital of 70.7% and 64.9%, respectively, significantly above Visa and the industry average. Nevertheless, American Express' integrated model, which incorporates customer lending, is bound to have some weight. Its high-quality receivables, disciplined risk management and solid earnings power make this leverage sustainable.
Mastercard’s free cash flow jumped 24.7% in 2024 to $13.6 billion and 55.5% in the first half of 2025 to $6.4 billion. On the other hand, American Express' free cash flow declined 28.6% in 2024 to $12.1 billion and 10.8% in the first half of 2025 to $8.1 billion.
Visa’s Price Performance, Valuation and Estimates
Shares of Visa have gained 7.2% year to date, outperforming the broader industry but underperforming the S&P 500 Index.
Visa YTD Price Performance
From a valuation standpoint, Visa trades at a forward price-to-earnings ratio of 26.42X, up from the industry average of 21.54X. Visa carries a Value Score of D.
The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings implies a 13.7% rise year over year, followed by 12.3% growth next year.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.