Visa Inc. (NYSE:V)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited an overall upward trend over the analyzed periods. Starting at $8,706 million in 2017, it increased consistently, reaching $15,234 million by 2022. Notably, there was a dip in 2020 where NOPAT decreased to $11,433 million from $12,431 million in 2019, likely reflecting external challenges during that year. However, it recovered in subsequent years, surpassing previous highs.

Cost of Capital

The cost of capital remained relatively stable throughout the six-year period, ranging narrowly between 12.96% and 13.31%. This consistency indicates steady financing conditions and risk assessments by the market with no significant volatility or abrupt changes in the cost trends.

Invested Capital

The invested capital showed moderate fluctuations during the period. It decreased from $51,080 million in 2017 to $47,578 million in 2018, then slightly rose again to $50,974 million in 2019. A substantial increase occurred in 2020, climbing to $61,524 million, followed by a slight decline and plateau around $60,800 million by 2022. This pattern suggests strategic investments or capital restructuring around 2020, maintaining relatively stable capital commitments thereafter.

Economic Profit

Economic profit demonstrated notable growth with some volatility. Starting at $2,084 million in 2017, it increased to $5,650 million by 2019, nearly tripling in two years. This was followed by a decline in 2020 to $3,335 million, paralleling the drop in NOPAT, likely due to external economic conditions at that time. After 2020, economic profit rebounded strongly, reaching a peak of $7,118 million in 2022. The fluctuations indicate variations in the company’s ability to generate returns above its cost of capital, but the overall positive trend points to improved value creation over the period.

The financial data reveals a consistent upward trajectory in both net income and net operating profit after taxes (NOPAT) over the period analyzed. Net income increased steadily from $6,699 million in 2017 to $14,957 million in 2022, showing robust growth across the years with a noticeable rise between 2017 and 2018, followed by continued incremental increases in subsequent years.

Similarly, NOPAT demonstrated an overall positive trend, starting at $8,706 million in 2017 and rising to $15,234 million in 2022. There was a slight deceleration in growth in 2018 compared to the previous year's jump, but subsequent years showed considerable gains, particularly between 2019 and 2021, before reaching the highest value in 2022.

Both metrics exhibit resilience during the year 2020, marked by a slight dip in net income from the previous year but a relatively stable NOPAT, indicating effective operational performance despite potential challenges. By 2021 and 2022, the figures rebounded strongly, surpassing prior highs, reflecting enhanced profitability and operational efficiency.

Net Income Trend

Substantial growth over the six-year span with minor fluctuations in 2020.

NOPAT Trend

Steady increase with a minor slowdown in 2018 and slight decline in 2020, followed by strong recovery.

Comparison Insights

The relationship between net income and NOPAT suggests consistent improvements in operational profitability and tax management, with NOPAT consistently exceeding net income, emphasizing effective operating margins.

Income Tax Provision

The income tax provision shows a fluctuating trend over the six-year period. Starting at 4,995 million USD in 2017, there is a significant decrease to 2,505 million USD in 2018. This is followed by a modest increase through 2019 and 2020, reaching 2,804 million USD and 2,924 million USD respectively. A notable rise occurs in 2021, reaching 3,752 million USD, before declining again to 3,179 million USD in 2022. Overall, despite some variability, the data suggests a downward shift from the initial 2017 level, with intermittent recovery periods.

Cash Operating Taxes

The cash operating taxes demonstrate some variability but generally display a less pronounced downward pattern compared to the income tax provision. Beginning at 3,463 million USD in 2017, there is an upward shift to 3,833 million USD in 2018, followed by a sharp drop to 2,626 million USD in 2019. From 2019 onward, values stabilize somewhat, with slight increases to 2,686 million USD in 2020 and 2,838 million USD in 2021. However, a considerable increase is observed in 2022, reaching 3,678 million USD, nearly returning to the 2017 level. This indicates fluctuating cash tax payments with a strong recovery in the final recorded year.

Comparative Insights

While both income tax provision and cash operating taxes fluctuate throughout the period, the income tax provision exhibits a more defined declining trend from 2017 to 2022 despite occasional rises. Conversely, cash operating taxes are more volatile, with a significant dip in the middle years but a marked rebound by 2022. The data may suggest differences in tax expense recognition versus actual cash tax payments, reflecting possible timing differences, changes in tax planning, or variations in tax liabilities versus cash outflows over time.

The analysis of the financial data reveals notable trends in the company's capital structure and debt levels over the six-year period under review.

Total Reported Debt & Leases

There is a general upward trend in total reported debt and leases from 2017 through 2022. The value initially decreased from 18,928 million USD in 2017 to 17,297 million USD in 2018, remaining relatively stable in 2019 at 17,430 million USD. However, a significant increase is observed in 2020, where debt and leases rose sharply to 24,640 million USD. Following this peak, the debt level decreased somewhat in 2021 to 21,551 million USD but increased again in 2022 to 22,970 million USD. This suggests an increased reliance on debt financing particularly beginning in 2020, likely influenced by external factors impacting liquidity needs or strategic financing decisions during that period.

Equity

Equity demonstrates a steady increase from 32,760 million USD in 2017 to a peak of 37,589 million USD in 2021, followed by a slight decline to 35,581 million USD in 2022. This upward trend until 2021 indicates consistent growth in shareholders’ equity, possibly driven by retained earnings or capital contributions. The minor decrease in 2022 may reflect changes such as share repurchases, dividend payments, or fluctuations in comprehensive income.

Invested Capital

Invested capital shows some variability over the period, with an initial decrease from 51,080 million USD in 2017 to 47,578 million USD in 2018. It then rises to 50,974 million USD in 2019, followed by a marked increase to 61,524 million USD in 2020. After a slight decrease and stabilization, invested capital remains fairly steady at approximately 60,800 million USD in 2021 and 60,981 million USD in 2022. The significant jump in 2020 aligns with the increase in debt, suggesting expanded investment activity or asset acquisitions funded partially through increased borrowing.

Overall, the data reflects an increased financial leverage beginning in 2020, alongside growth in invested capital. Equity growth has been steady but exhibits a slight contraction in the final year, which merits monitoring in view of the rising debt levels. These patterns indicate strategic financial management responding to evolving operational or market conditions during the timeframe analyzed.

Economic Profit

The economic profit exhibited a generally upward trend over the analyzed period. Starting at 2,084 million USD in 2017, it increased to a peak of 5,650 million USD in 2019. A decline followed in 2020, with economic profit falling to 3,335 million USD, possibly reflecting external challenges during that year. Subsequently, economic profit rebounded significantly, reaching 4,967 million USD in 2021 and further climbing to 7,118 million USD in 2022, marking the highest value within the period.

Invested Capital

Invested capital fluctuated moderately throughout the years. Initially, it decreased from 51,080 million USD in 2017 to 47,578 million USD in 2018. After this decline, a recovery trend is observed with invested capital increasing to 50,974 million USD in 2019 and continuing upward to 61,524 million USD in 2020. Minor decreases and stabilization followed, with invested capital reported at 60,806 million USD in 2021 and marginally rising to 60,981 million USD in 2022.

Economic Spread Ratio

The economic spread ratio displayed notable variability during the period. It rose from 4.08% in 2017 to a substantial 11.08% in 2019, indicating improved profitability relative to invested capital. A significant dip occurred in 2020, falling to 5.42%, corresponding with a previous decline in economic profit and possibly linked to the broader economic environment. The ratio recovered thereafter, registering 8.17% in 2021 and reaching its highest point of 11.67% in 2022, suggesting enhanced efficiency in generating economic profit from the capital invested.

Summary Insights

The data demonstrate resilience and recovery following a downturn around 2020. Despite a temporary reduction in economic profit and spread ratio, the company achieved considerable growth in economic profit by 2022, while invested capital remained relatively stable after some fluctuations. The simultaneous increase in economic spread ratio and economic profit in the latter years suggests improvements in capital utilization and profitability.

Economic Profit

The economic profit exhibits a generally upward trajectory over the observed period. Starting at 2,084 million USD in 2017, it increases to 2,843 million USD in 2018, then sharply rises to 5,650 million USD in 2019. Following a decline to 3,335 million USD in 2020, the figure recovers to 4,967 million USD in 2021 and reaches a peak of 7,118 million USD in 2022. This pattern indicates some volatility, with a notable dip in 2020, likely reflecting external challenges during that period, but an overall strong growth trend.

Net Revenues

Net revenues show a consistent upward trend. From 18,358 million USD in 2017, revenue steadily grows to 20,609 million USD in 2018, then to 22,977 million USD in 2019. There is a slight decrease in 2020 to 21,846 million USD, followed by a recovery and further growth to 24,105 million USD in 2021 and a significant increase to 29,310 million USD in 2022. This reflects resilience and positive business expansion after a minor setback in 2020.

Economic Profit Margin

The economic profit margin displays variability but an overall improvement. It begins at 11.35% in 2017 and rises to 13.79% in 2018, reaching a peak of 24.59% in 2019. Subsequently, the margin declines to 15.27% in 2020 but recovers strongly to 20.61% in 2021 and further to 24.28% in 2022. This suggests improved efficiency and profitability relative to the company's revenue, particularly in the latter years.