Think Visa's Q4 Was Good? Wait Till You See What's Under the Hood

Visa Inc. V, the global payments technology powerhouse, capped fiscal 2025 with another sturdy performance in the fourth quarter, driven by strong processed transactions and robust payment and cross-border volumes. For investors, Visa continues to represent stability, a stock that rarely disappoints. Yet, for some, its dependable growth can seem almost too predictable, lacking the thrill of rapid gains.

Since reporting results on Oct. 28, shares have slipped about 2%, pulling further from the 52-week high of $375.51. Still, the latest earnings reveal plenty brewing beneath the surface, offering a glimpse of just how far Visa’s growth runway extends.

Dissecting Visa’s Q4 Earnings

Earnings & Sales Beat: Visa’s EPS of $2.98 beat the Zacks Consensus Estimate by a penny and grew 10% year over year. Also, the top line of $10.7 billion beat the consensus mark by 1% and improved 12% from a year ago.

Major Metrics Remain Solid: Processed transactions grew 10% year over year to 67.7 billion and beat our model estimate of 67.4 billion. On a constant-dollar basis, cross-border volumes surged 12% year over year, as travel activity continued to gain momentum. Also, its payment volumes grew 9% year over year on a constant-dollar basis.

For more insights, read our blog: Visa Q4 Earnings Beat Estimates on Processed Transactions.

Initiatives Paying Off: Visa’s transaction-based model remains resilient, largely insulated from specific spending categories that may ebb and flow with economic cycles. One standout area was Value-Added Services (VAS), which saw revenue grow 25% in constant dollars to $3 billion. A few years ago, VAS contributed 20% of Visa’s top line; it’s now approaching 30%. This rapid expansion highlights the success of Visa’s strategy to diversify income beyond traditional payment processing.

VAS encompasses advisory services, issuing solutions, fraud prevention, tokenization and risk management, tools that deepen Visa’s integration with banks and merchants. The company is also accelerating its push into digital asset infrastructure. Its Visa Tokenized Asset Platform lets banks issue and burn their own stablecoins, while the addition of stablecoin settlement capabilities within Visa Direct enhances cross-border money movement. Visa Direct transactions surged 23% to 3.4 billion, supported by both domestic and international activity.

Its Visa Direct prefund initiatives are designed to address one of the biggest challenges in international payments: liquidity management. As prefunding gains traction, Visa’s ability to move money seamlessly and instantly across borders positions it as a critical bridge between traditional finance and emerging digital ecosystems. Within its CMS division, Visa continues to invest in vertical-specific opportunities and new Visa Direct capabilities to capture further market share.

Since 2020, Visa has managed more than $140 billion in crypto and stablecoin flows, including over $100 billion in user purchases of such assets. With more than 130 stablecoin-linked card programs spanning 40+ countries, Visa has proven its adaptability. Instead of resisting the digital currency wave, it’s absorbing and operationalizing it, turning potential disruption into long-term advantage.

Tailwinds for Visa

Regulatory clarity is another tailwind working in Visa’s favor. The passage of the GENIUS Act provided long-awaited guidelines around digital assets, easing legal uncertainty for companies handling stablecoin transactions. Visa, now authorized to settle across four stablecoins and four blockchains, gains a clear advantage over traditional banks that continue to grapple with compliance burdens and legacy systems.

For smaller financial institutions, joining Visa’s network could become a necessity rather than an option. The combination of regulatory clarity and Visa’s digital infrastructure makes it an attractive partner for banks aiming to modernize payment capabilities without massive capital investment. This amplifies Visa’s already formidable network effects, where each additional participant enhances the ecosystem’s scale, data intelligence and profitability.

Armed with robust cash flows, Visa continues to reinvest aggressively in infrastructure, marketing and innovation. With global digital payment adoption accelerating, its $623.7 billion market cap and dominant international footprint provide a durable competitive moat that few stocks can match.

Visa Continues to Reward Shareholders

Visa’s commitment to returning capital remains intact. During the quarter, the company returned $6.1 billion to shareholders ($4.89 billion through buybacks and $1.2 billion via dividends). As of Sept. 30, $24.9 billion remained under its repurchase authorization. The dividend yield of 0.69% sits slightly above the industry average of 0.65%, and Visa’s consistent record of dividend hikes underscores confidence in its long-term cash generation ability.

Favorable Estimates for Visa

Analyst sentiment remains upbeat. The Zacks Consensus Estimate for Visa’s fiscal 2026 and fiscal 2027 EPS implies an 11.7% and 13.3% uptick, respectively, on a year-over-year basis. Similarly, the consensus mark for fiscal 2026 and fiscal 2027 revenues suggests a 10.8% and 10.4% increase, respectively. The company beat earnings estimates in each of the past four quarters, with an average surprise of 2.7%.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

Visa’s Price Performance & Valuation

Year to date, Visa shares have risen 7.6%, outpacing the industry’s 9.7% decline but trailing the S&P 500’s 16.7% gain. Among peers, Mastercard Incorporated MA has advanced 5.1%, while American Express Company AXP has surged 23.3%.

YTD Price Performance Comparison – V, MA, AXP, Industry & S&P 500

Visa’s premium valuation could temper near-term upside, with the stock trading at 26.19X forward price/earnings versus the industry average of 20.81X.

Meanwhile, Mastercard and American Express are currently trading at 29.69X and 21.29X, respectively.

Visa’s Hurdles

That said, competition is intensifying. As reported by The Wall Street Journal, retail heavyweights Walmart and Amazon are exploring the launch of USD-pegged stablecoins to control their payment ecosystems and cut billions in interchange fees currently funneled to networks like Visa and Mastercard. If successful, such efforts could erode a small slice of transaction volume over time.

Visa also faces ongoing legal and regulatory challenges. The U.S. Department of Justice’s antitrust lawsuit remains a cloud over the stock, and proposed legislation such as the Credit Card Competition Act could reshape how interchange fees are governed. Internationally, both Visa and Mastercard are contending with adverse rulings in the U.K., where the London Competition Appeal Tribunal found their multilateral interchange fees in violation of European competition law.

Final Verdict: Hold Visa Now

Visa’s fiscal fourth quarter results reaffirm its strength as a digital payments powerhouse. Growth in Visa Direct, tokenization and Value-Added Services is adding depth beyond core transactions. Despite macro concerns and fierce fintech competition, Visa’s scale, cash flow and pricing power remain unmatched. The company continues to reward shareholders through steady buybacks and dividends. While its premium valuation limits short-term upside, Visa’s durable business model and ongoing innovation support long-term growth. With stable fundamentals and a balanced outlook, it currently has a Zacks Rank #3 (Hold).

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

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This article originally published on Zacks Investment Research (zacks.com).

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