How to Spot the Perfect Time to Buy Visa Stock

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On Thursday afternoon, the world’s largest publicly traded credit and debit card company – Visa (NYSE:V) — reported its second-quarter earnings results. While net income rose 26 percent to $1.6 billion, and while earnings per share rose 31 percent to $2.52 per share, the stock dropped about 3.5 percent in after-hours trading to $202 per share.

Is this a buying opportunity, or does the selloff reflect a genuine concern? If we dig beneath the headline numbers, we realize that Visa’s growth wasn’t as strong as it first appears. The sharp increase in profits is the result of a tax benefit, without which the company grew income at just 15 percent. Furthermore, revenues grew at just 7 percent.

If we look at some other metrics, we see a couple of other concerning issues. For instance, the company reported 12 percent growth in payment volume. If we compare this figure with the company’s 7 percent sales growth, we find that it is earning a lower average fee per transaction.

Given these points, we find that the company’s growth is decelerating on several fronts, and this means that the stock is worth less — the selloff is justified.

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