The electronic-payments industry has skyrocketed in recent years, and Visa (NYSE:V) has led the way in the revolution toward greater use of credit and debit cards and electronic payment systems around the world. Visa performed quite well in 2015, defying some economic headwinds internationally to produce solid growth. In particular, Visa had several intriguing pieces of good news that helped lift both its stock price and its future prospects. Let's look more closely at Visa's best headlines in 2015.
Visa's earnings growth continues
In November, Visa reported its full-year fiscal 2015 results, and the figures were striking in showing how much progress the card giant has made. Full-year net income amounted to $6.33 billion, up more than 16% from fiscal 2014. That produced adjusted earnings of $2.58 per share, which was up 20% from year-ago levels and also reflected the reduction in Visa's total share count that has resulted from its returning capital to shareholders over the course of the year.
CEO Charlie Scharf was pleased with the way that Visa managed to grow its earnings. "The underlying growth of our franchise continued as evidence by our strong payments volumes as well as new and renewed partnerships during the year," Scharf said. "Most importantly, we continued to build our capabilities at the physical point of sale as well as in the digital space."
Visa does anticipate that the strong dollar will continue to weigh on its growth. Still, given how well Visa did at overcoming those pressures in 2015, investors are right to be optimistic about the company's ability to do so again in 2016.
Visa boosts dividend by 17%, announces new $5 billion stock buyback
Visa has developed a strong reputation for treating its shareholders well. The company did two things to return more money to its investors in 2015, boosting its dividend and announcing a new share repurchase program.
On the dividend front, Visa raised its quarterly payout in October to $0.14 per share, which amounts to a 17% increase. As impressive as that sounds, it still left Visa with a subpar dividend yield of just 0.7%. That's right in line with rival MasterCard (NYSE:MA) and its 0.8% yield, but it demonstrates just how unimportant dividends are to most Visa investors.
More importantly, Visa said in November that it would implement a new $5 billion stock buyback program. The move came even though the card giant still had $2.8 billion outstanding on its existing share buyback program as of the end of September, giving the company even more leverage to cut back on its share count and boost its per-share earnings figures. With a market cap of nearly $200 billion, even a buyback of this size isn't enough to make a huge influence, but it nevertheless signals Visa's confidence in the stock's long-term prospects.
Visa to buy Visa Europe
Finally, Visa announced in early November that it would move forward to acquire Visa Europe in a transaction worth as much as 21.2 billion euros. Visa Europe shareholders will receive a combination of 11.5 billion euros in cash as well as convertible preferred stock worth another 5 billion euros. After that, shareholders will be eligible to receive an earn-out of up to 4.7 billion euros, which Visa will pay on the fourth anniversary of the closing of the transaction.
Visa expects to give European clients greater access to its global connections, offering a more seamless experience than it has now through Visa Europe. For its part, Visa sees Europe as a "highly attractive region" and hopes to position the post-merger company to boost its scale, become more efficient, and offer the profit potential that currently isn't available in Visa Europe's association model. "We are very excited about unifying Visa into a single global company," Scharf said, and he sees the transaction as "beneficial for financial institutions, acquirers, merchants, cardholders, and other partners, as well as for our employees and shareholders."
Visa has had a good 2015, and these three things show just how successful the company has been. Due in part to this good news, Visa has set the stage for even further growth in 2016 and beyond.