Visa Posts Strong Double-Digit Growth -- Time to Buy the Stock?

Payments remains one of the steadier parts of tech-enabled finance, and Visa (NYSE: V) just gave investors fresh evidence. The network reported another period of double-digit revenue growth and announced a significant dividend increase.

Visa's latest update is encouraging, ultimately providing an upbeat report on payments volume and cross-border activity. But it also offers a good reminder of the role of client incentives in the net revenue line (more on this in a bit).

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Understanding what's behind Visa's momentum

"In our fourth quarter, continued healthy consumer spending drove net revenue up 12% to $10.7 billion," Ryan McInerney, Visa's CEO, said in the company's fiscal fourth-quarter 2025 earnings release. That comment aligns with the engagement data, which points to broad-based activity -- signaling this momentum is looks durable.

Visa's engagement markers moved higher in fiscal Q4 (the quarter ended Sept. 30). Payments volume (a measure of customer spend) increased 9% year over year in constant dollars, up from 8% growth in Q3 -- a small but real sequential uptick. Total processed transactions rose 10%, matching Q3's pace. Cross-border volume grew 12% (11% excluding transactions within Europe), in line with Q3.

Highlighting the breadth of Visa's business, service revenue grew 10% (it lags and ties to prior-quarter volume), while data processing revenue rose 17%. Additionally, international transaction revenue increased 10%.

Offsetting some of the company's activity tailwinds, client incentives increased 17% -- a meaningful acceleration (in this case, an acceleration actually weighs on net revenue growth) from Q3, when client incentives rose 13%.

All of these drivers helped net revenue rise by a nice double-digit rate of 12%. Higher incentives, however, notably led to a deceleration in the company's total top-line growth (third-quarter net revenue rose at a rate of 14% year over year).

Still, Visa's earnings profile looks solid. Its non-GAAP earnings per share increased 10% in Q4 and 14% for the full year. Ultimately, therefore, Visa's model is still converting higher activity into profit despite elevated incentives.

But is the stock worth 34 times earnings?

Prices at around $350 per share, Visa trades at about 34 times its fiscal 2025 generally accepted accounting principles (GAAP) earnings per share of $10.20 and about 30 times its non-GAAP earnings per share of $11.47. A multiple this high assumes double-digit net revenue growth -- and that the company's high-margin profile (Visa boasts a net profit margin of about 50%) can persist. Of course, this means there's not much room for disappointment if incentives trend even higher, or if consumer weakness surfaces.

Still, there's a lot to like about the company -- and the stock. The sequential change in the year-over-year spending bodes well for both customer engagement with Visa credit cards and resilience. Further, the company's lucrative operation and healthy balance sheet means it can deliver returns to shareholders not just through business growth but through capital returns; Visa returned $22.8 billion to shareholders in fiscal 2025 through repurchases and dividends, including $6.1 billion in Q4 alone. And the company just raised the quarterly dividend an impressive 14% to $0.670 per share.

Buy, hold, or sell?

Visa continues to show durable customer economics, with engagement steady to slightly better and monetization that appears intact despite higher incentives. That backdrop, combined with sizable capital returns, fits the long-term compounding profile that Visa has become famous for on Wall Street.

The stock's price-to-earnings ratio today, of course, already assumes that pattern continues. Further, when set against Q3's faster net revenue growth, Q4's modest deceleration due to higher incentives may be enough to justify patience toward the stock.

Overall, I'd argue that shares look like a hold -- not a buy or a sell. The business is great. But the valuation bakes that in.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.