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What Makes Visa (V) March Ahead of Its Industry Year to Date

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Visa Inc. (V - Free Report) , a payment processing company, is one of investors’ favorite with a formidable position in the thriving payments industry.

The company has never failed to impress investors with its exemplary earnings performance history, having surpassed estimates in 25 of the last 28 quarters and meeting the same in the rest of the three.

In a year’s time, the stock has rallied 25% compared with its industry’s growth of 19%.

This impressive feat of operating profitability has been delivered by the company by virtue of growth in its payments volumes and cross-border spending.

Payments volumes refer to total spending on Visa branded payment products to pay for goods and services and cross-border spending means payment made for purchases in another country.

In fiscal year, Visa’s payment credentials, which include traditional cards, card numbers stored in files at online businesses and card numbers stored on mobile devices were used 182 billion times, which means almost half a billion transactions on a daily basis last year.   

The primary reason behind the company’s growth is the strength and breadth of its global network and the company has been working to further strengthen the same by enhancing VisaNet (Visa’s processing platform), driving the adoption rate of payment acceptance technologies, growing the usage across its digital platforms and expanding its footprint.

With regard to enriching its VisaNet processing platform, the company has successfully migrated Visa Eurpoe’s client from Visa Europe legacy network to its propriety processing platform. This was a massive undertaking that will benefit clients in terms of the scale, resilience and redundancy of the company’ network operations.  

In an effort to drive the uptake of payment technologies, Visa is constantly focusing on improving the speed, security, accessibility of digital transactions in face-to-face and on-line environments. In this regard, it has made investments in contactless, scan-to-pay and Secure remote commerce, which are better known as ecommerce and mobile commerce.

To grow its digital arm, the company is leveraging its Visa Direct platform and propagating the use of tokens. It consistently invests in artificial intelligence to help detect and prevent fraud.

Visa’s expansion into other business verticals, such as business to business, also has driven the company’s growth. Visa leads this B2B market in terms of card solutions and steadily invests in growing its market share on this front.

At the end of fiscal 2018, the company had more than 3.3 billion card credentials to its credit, that were available to be used at nearly 54 million merchant locations. Its vast network will enable it to expand over time as more people come into the financial mainstream, as the IoT enables cars, homes and offices to connect with the world of commerce.

Cash and checks still account for approximately $17 trillion in consumer spending worldwide and there is a sizeable market for P2P, B2B and B2C payments. These bode well for Visa’s growth in the long haul.

Visa carries a Zacks Rank #2 (Buy). Some other stocks worth considering are FleetCor Technologies, Inc. (FLT - Free Report) , Global Payments, Inc. (GPN - Free Report) and WEX Inc. (WEX - Free Report) , each carrying the same top Zacks Rank of 2 as Visa. Each company’s earnings surpassed estimates in all the trailing four quarters, the average positive surprise being 1.71%, 3.11% and 2.12%, respectively.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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