Visa (V) — is a steal after a recent price drop?

v  After Visa announced the Q1’14 results, shares fell to $200. In my opinion it is a reflection of misunderstanding of the results, which also ignores the quality of company’s balance sheet as well as the the growth prospects.

v  Visa has grown net operating revenues in Q1 by 11% YoY, thanks due to robust growth of service revenues, data processing revenues and international transaction revenues.

v  During the quarter the company has repurchased 5.5mln shares at an average price $199.56 using $1.1bln of cash at hand.

v  The company has not debt, no pension obligations or even no preferred stock.

v  Free cash flow for the company at the end of Q1 was $1.6bln, while capital expenditures were $250mln in total (!).

v  In 2008, there were 1.4bln shares outstanding, while at the end of Q1, shares outstanding fell to 656mln shares. Visa is repurchasing about $1.1 billion worth of its stock per quarter, which works out to $4.4 billion annualized.

v  All in all, we can safely state that Visa is growing both organically and repurchasing more and more shares which should have a sizeable effect on per share earnings in the future.

v  An investor with a long term horizon should definitely have a look at the company this pristine.