Visa Inc. (NYSE:V)

Net operating profit after taxes (NOPAT)

The net operating profit after taxes exhibited an overall upward trend over the six-year period. Starting at $8,706 million in 2017, NOPAT increased steadily, peaking at $15,234 million in 2022. An exception occurred in 2020, where a slight decline was observed relative to 2019, possibly indicating operational challenges during that year. Nonetheless, the subsequent years showed strong recovery and growth, suggesting improved operational efficiency or market conditions.

Cost of capital

The cost of capital remained relatively stable throughout the period, fluctuating marginally between 13.09% and 13.44%. There was a slight incremental increase over time, with no abrupt changes. This stability implies that the company’s required returns and risk assessments have been consistent, supporting a steady investment environment.

Invested capital

Invested capital showed variability during the period. It started at $51,080 million in 2017 and decreased to a low of $47,578 million in 2018, indicating potential divestments or capital efficiency improvements. Subsequently, invested capital rose significantly to $61,524 million by 2020, reflecting increased capital deployment or asset acquisition. After 2020, invested capital remained relatively flat, stabilizing near $60,000 million through 2022. This suggests a plateau in capital investment or a strategic shift to maintaining asset levels.

Economic profit

Economic profit demonstrated a positive and strengthening trajectory over the analyzed years. Starting at $2,019 million in 2017, it increased substantially to $5,583 million in 2019, indicating enhanced value creation above the company’s cost of capital. Although economic profit experienced a dip in 2020, aligning with the NOPAT decline, it rebounded strongly in the following years, reaching $7,037 million in 2022. This growth highlights improved profitability and efficient use of capital to generate returns exceeding costs.

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 Trends

The economic profit exhibited a generally upward trend over the analyzed period. Starting at 2,019 million USD in 2017, there was an increase to 2,780 million USD in 2018, followed by a further rise to 5,583 million USD in 2019. Although 2020 saw a decline to 3,255 million USD, the economic profit recovered in subsequent years, reaching 4,887 million USD in 2021 and peaking at 7,037 million USD in 2022. This pattern indicates overall robust profitability with a temporary setback in 2020.

Invested Capital Evolution

Invested capital showed fluctuations but with a slight increasing tendency in the latter years. It started at 51,080 million USD in 2017, decreased to 47,578 million USD in 2018, and then increased again to 50,974 million USD in 2019. A notable rise occurred in 2020, with invested capital reaching 61,524 million USD, followed by a small decrease and stabilization around 60,800 million USD in 2021 and 60,981 million USD in 2022. This reflects a period of capital expansion particularly from 2019 to 2020, with stabilization afterward.

Economic Spread Ratio Development

The economic spread ratio, expressed as a percentage, followed a fluctuating upward trajectory. It began at 3.95% in 2017, increased to 5.84% in 2018, and surged to 10.95% in 2019. The ratio then declined to 5.29% in 2020, but subsequently improved to 8.04% in 2021 and reached its highest level of 11.54% in 2022. These fluctuations imply changes in the return on invested capital relative to its cost, with a significant improvement by the end of the period.

Overall Insights

The company demonstrated strong value creation capacity, as indicated by the consistent increase in economic profit and the improving economic spread ratio over the analyzed years. The temporary dip in economic profit and spread ratio in 2020 may be attributed to external or operational challenges during that period. Invested capital growth, particularly in 2020, suggests strategic investments or capital allocation adjustments, which appear to have supported the subsequent recovery and growth in economic profit and spread. Overall, the data reflect an effective capital management strategy and the ability to generate increasing economic value.

The financial data reveals notable trends in the company's performance over the six-year period ending September 30, 2022.

Economic Profit

The economic profit showed a general upward trajectory with some fluctuations. Starting at 2,019 million USD in 2017, it rose to 2,780 million USD in 2018 and further increased substantially to 5,583 million USD in 2019. There was a decline in 2020 to 3,255 million USD, likely impacted by external economic factors. However, the metric recovered strongly in subsequent years, reaching 4,887 million USD in 2021 and peaking at 7,037 million USD in 2022, indicating improved profitability efficiency.

Net Revenues

Net revenues exhibited consistent growth overall, with slight variability. From 18,358 million USD in 2017, revenues increased steadily to 20,609 million USD in 2018 and 22,977 million USD in 2019. A dip occurred in 2020, with revenues dropping to 21,846 million USD, mirroring the economic profit trend and suggesting possible market challenges. Revenues then resumed an upward trend, reaching 24,105 million USD in 2021 and notably rising to 29,310 million USD in 2022, reflecting enhanced sales and market engagement.

Economic Profit Margin

The economic profit margin improved markedly over the period. It started relatively low at 11% in 2017, rose moderately to 13.49% in 2018, and saw a sharp increase to 24.3% in 2019. The margin contracted to 14.9% in 2020, aligning with the declines seen in profit and revenue, then recovered to 20.27% in 2021 and further increased to 24.01% in 2022. These fluctuations suggest effective management of costs and profitability, especially after 2020 adjustments.

Overall, the data indicates a resilient financial performance characterized by strong growth in net revenues and economic profit, notwithstanding a temporary setback in 2020. The rebound in economic profit and margin from 2021 onwards signals enhanced operational efficiency and profitability, positioning the company positively for future financial stability.