Visa Inc. (NYSE:V)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a generally increasing trend from 2017 to 2022. Starting at 8,706 million USD in 2017, it experienced a moderate increase in 2018 and a substantial rise in 2019 reaching 12,431 million USD. There was a slight decline in 2020 to 11,433 million USD, likely reflecting economic challenges during that period. However, the profit recovered and continued to grow in the following years, reaching 15,234 million USD by 2022.

Cost of Capital

The cost of capital remained relatively stable over the period under review. It fluctuated marginally between 13.07% and 13.42%, showing no significant upward or downward trend. This stability suggests a consistent risk and return profile expected by investors.

Invested Capital

Invested capital demonstrated some variability across the years. It decreased from 51,080 million USD in 2017 to 47,578 million USD in 2018, then rebounded to 50,974 million USD in 2019. A notable increase occurred in 2020, rising to 61,524 million USD, which was largely maintained through 2021 and 2022 at approximately 60,800 to 60,981 million USD. This pattern indicates significant reinvestment or asset allocation adjustments starting in 2020.

Economic Profit

Economic profit exhibited strong positive growth, indicating value creation above the cost of capital. Beginning at 2,029 million USD in 2017, it rose steadily to 2,790 million USD in 2018 and nearly doubled to 5,594 million USD in 2019. Despite a decrease in 2020 to 3,268 million USD, economic profit recovered to 4,900 million USD in 2021 and further increased to 7,050 million USD in 2022. This trend reflects improved efficiency and profitability over time, particularly after 2020.

Overall Insights

The data reveals a company with strengthening profitability and value creation capabilities over the six-year span, despite a dip in 2020 likely linked to external economic factors. Costs of capital remained steady, supporting sustained economic profit gains. The increase in invested capital from 2020 onwards suggests strategic investments or asset expansions contributing to improved financial performance. The patterns indicate resilience and growth potential within the operational and financial framework.

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 significant fluctuations over the analyzed periods. From 2017 to 2019, it showed a strong upward trend, rising from 2,029 million USD in 2017 to a peak of 5,594 million USD in 2019. However, a notable decline occurred in 2020, when economic profit decreased to 3,268 million USD. This downturn was followed by a recovery phase in 2021 and 2022, with economic profit increasing to 4,900 million USD and then reaching the highest value of 7,050 million USD in 2022.

Invested Capital

Invested capital demonstrated a more stable, slightly fluctuating pattern. It started at 51,080 million USD in 2017 and saw a decline in 2018 to 47,578 million USD. Afterward, it increased again in 2019 to 50,974 million USD and peaked considerably in 2020 at 61,524 million USD. The capital base maintained a similar elevated level thereafter, with marginal decreases and stabilizing around 60,800 to 60,981 million USD during 2021 and 2022.

Economic Spread Ratio

The economic spread ratio, representing the return on invested capital above cost, varied substantially across the years. It rose steadily from 3.97% in 2017 to 10.97% in 2019, indicating improved profitability efficiency. A decline was recorded in 2020 to 5.31%, coinciding with the reduced economic profit in the same year. Subsequent years showed recovery and further improvement, climbing to 8.06% in 2021 and reaching the highest level of 11.56% in 2022, surpassing previous highs.

Overall Insights

Over the analyzed period, economic profit and economic spread ratio reveal a pattern of initial growth, a dip in 2020, and a strong recovery and improvement thereafter. The invested capital base, while generally stable, experienced growth particularly in 2020, which may have been associated with strategic investments or capital expansion efforts. The data suggest resilience and an ability to enhance value creation post-2020, with economic profitability efficiency increasing notably in the latest periods.

The financial data indicates several notable trends over the six-year period analyzed.

Economic Profit

Economic profit demonstrates a generally upward trajectory, rising from 2,029 million USD in 2017 to 7,050 million USD in 2022. This reflects a significant increase in value generated beyond the cost of capital. There is a notable spike in 2019 where economic profit nearly doubles from the prior year (2,790 million USD in 2018 to 5,594 million USD in 2019), followed by a decline in 2020 to 3,268 million USD, presumably due to challenging economic conditions during that year. Subsequently, economic profit recovered strongly in 2021 and continued to increase in 2022.

Net Revenues

Net revenues show a steady and consistent increase over the period, growing from 18,358 million USD in 2017 to 29,310 million USD in 2022. While revenues dipped slightly in 2020 to 21,846 million USD from the 2019 peak of 22,977 million USD, the trend quickly reversed with revenues surpassing previous levels in both 2021 and 2022. This suggests resilience and ability to grow top line despite the short-term setback in 2020.

Economic Profit Margin

The economic profit margin, representing economic profit as a percentage of net revenues, exhibits considerable variability. It rose from 11.05% in 2017 to a peak of 24.34% in 2019, indicating enhanced profitability and efficient capital utilization. A decline followed in 2020 to 14.96%, consistent with lower economic profit during that year. However, margins improved again in 2021 and 2022, reaching 20.33% and 24.05%, respectively, signaling effective recovery and strong profitability performance in recent years.

Overall, the data reflects robust growth in economic profit and net revenues with some volatility around 2020. The recovery in subsequent years is strong, suggesting improved operational efficiency and sustained value creation. Economic profit margins confirm this trend with marked improvement post-2020 dip.