The electronic payments processor reported solid operating results for the first half of the year. Important measures of growth, such as payments volume and the number of processed transactions, continued to look healthy, increasing in the high-single-digit range on a constant-currency basis.
Overall, revenue and earnings per share are up 11% and 19%, respectively, through the first half of fiscal 2019 (which ends in September). However, the increase in the stock price year to date through June can be attributed to an advance in the valuation. The stock entered 2019 trading for less than 25 times this year's earnings estimates, whereas now the forward P/E is at 33.7.
Visa is certainly deserving of a premium valuation. The company processed a staggering 32.5 billion transactions in the last quarter alone, and management continues to invest in new opportunities to expand the company's transaction flow, including peer-to-peer payments, fintech, digital banking, and digital wallets.
CEO Alfred Kelly summed up why investors are so bullish on the stock with the following statement:
We continue to see tremendous long-term growth opportunity in many markets including Continental Europe, Africa, South America, Japan, Mexico and many parts of Asia. Additionally, we continue expanding our footprint in both mature and emerging markets and we remain committed to growing access and acceptance until every business and every device in the world is enabled to send and receive funds via the Visa network.
It's the ability of Visa to pursue these growth opportunities while continuing to maintain its sky-high operating margin of 66% that should make the stock a rewarding investment for shareholders over the long term.
As for 2019 guidance, management expects revenue to be up in the low double digits over fiscal 2018, while non-GAAP earnings per share should increase in the mid-teens.