Visa Inc (V): Excellent Growth and Shareholder Friendly Management

If Visa sounds expensive, consider that MasterCard trades at 30 times earnings, with almost the exact same earnings growth rate expected.  American Express trades at just 15 times earnings, however, analysts predict they will have challenges growing earnings ahead, only projecting 7.9% growth.  Don’t get me wrong, I love American Express as a long-term investment.  It trades at a cheap valuation and is a remarkably stable company.  Visa, however, is more of a play on growth at this point.

Conclusion

Visa is the best company in its sector, and should continue to grow nicely for years to come.  As long as there are no major surprises during the earnings call, such as slower than expected growth, I would consider Visa a definite buy.  Since going public, Visa averages an earnings multiple of right around 22, where it is currently.  Using the estimates above, this gives me price targets for the next three years of $160, $185, and $216.

The article Excellent Growth and Shareholder Friendly Management originally appeared on Fool.com and is written by Matthew Frankel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.