DCF Studio

    V · NYQ · Financial Services

    Visa Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 196.44

    Market price

    USD 368.29

    Implied upside

    -46.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.

    Current EV/EBITDA of 25.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 196.44-46.7%
    Exit multiple
    USD 326.92-11.2%
    Market price
    USD 368.29

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn15bn30bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 44.4bnUSD 49.2bnUSD 54.6bnUSD 60.6bnUSD 67.2bn+10.9%
    EBITUSD 29.7bnUSD 32.9bnUSD 36.5bnUSD 40.5bnUSD 44.9bn+10.9%
    NOPATUSD 24.5bnUSD 27.2bnUSD 30.1bnUSD 33.4bnUSD 37.1bn+10.9%
    Add depreciation & amortisationUSD 1.3bnUSD 1.4bnUSD 1.6bnUSD 1.8bnUSD 2.0bn+10.9%
    Less capital expenditureUSD -1.5bnUSD -1.7bnUSD -1.9bnUSD -2.1bnUSD -2.3bn+10.9%
    Less increase in working capitalUSD -4.4bnUSD -4.8bnUSD -5.4bnUSD -6.0bnUSD -6.6bn+10.9%
    Free cashflow to firmUSD 19.9bnUSD 22.1bnUSD 24.5bnUSD 27.2bnUSD 30.1bn+10.9%
    Discount factor0.95600.87360.79840.72960.6668-
    Present valueUSD 19.0bnUSD 19.3bnUSD 19.6bnUSD 19.8bnUSD 20.1bn+1.4%
    Present Value Of The ForecastUSD 97.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.840Reported 0.761, pulled toward 1.0 (Blume)
    Cost of equity9.62%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 691.4bn96.5% of capital
    Total debtUSD 25.2bn3.5% of capital, book value as a proxy
    Tax rate17.5%Effective, capped at statutory
    WACC9.42%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 196.44

    78% of EV

    Forecast FCFF, final year
    USD 30.1bn
    Capex at depreciation, working capital in reinvestment
    USD 37.2bn
    Less reinvestment at g/ROIC (7.7% of NOPAT)
    USD -2.9bn
    Capitalised
    USD 34.4bn
    ROIC (reported)
    32.6%
    Terminal value, undiscounted
    USD 509.0bn
    Terminal value, discounted
    USD 339.4bn
    Enterprise value
    USD 437.2bn
    Less net debt
    USD 6.2bn
    Equity value
    USD 431.0bn

    Exit at 20.0x EBITDA

    Value per shareUSD 326.92

    86% of EV

    Terminal value, undiscounted
    USD 938.3bn
    Terminal value, discounted
    USD 625.6bn
    Enterprise value
    USD 723.4bn
    Less net debt
    USD 6.2bn
    Equity value
    USD 717.3bn

    Spread between methods: 50%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.42%244.90260.96280.24303.84333.40
    8.42%207.75218.59231.23246.16264.09
    9.42%180.05187.71196.44206.51218.25
    10.42%158.62164.21170.49177.59185.69
    11.42%141.56145.75150.40155.58161.39

    Outlined: this model. Green text: above today's price of 368.29. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year10.9%28.3%+17.3pp
    Discount rate9.4%6.3%-3.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.