Visa Inc. (NYSE:V)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a generally upward trajectory over the period from 2017 to 2022. Starting at 8,706 million US dollars in 2017, it increased gradually to 9,137 million in 2018, followed by a more significant rise to 12,431 million in 2019. Although there was a slight decline to 11,433 million in 2020, likely influenced by external challenges during that year, the figure rebounded and continued its growth to 13,020 million in 2021 and further to 15,234 million in 2022. This pattern suggests resilience and an overall strengthening of profitability over the six-year span.

Cost of Capital

The cost of capital has remained relatively stable across the years, fluctuating slightly between 12.91% and 13.25%. The lowest point was in 2017 at 12.91%, with a gradual increase peaking marginally at 13.25% in 2022. This consistency indicates steady financing conditions and risk perceptions associated with the company's investment environment during this timeframe.

Invested Capital

Invested capital exhibited some variability over the years. It started at 51,080 million US dollars in 2017, decreased to 47,578 million in 2018, before rising again to 50,974 million in 2019. A considerable jump occurred in 2020, with invested capital reaching 61,524 million, maintaining similar levels in 2021 and 2022 at approximately 60,800 million. This suggests increased resource commitments or capital intensification strategies beginning in 2020, which might be aligned with business expansion or shifts in asset structure.

Economic Profit

Economic profit shows an overall strong upward trend, beginning at 2,113 million US dollars in 2017. It increased to 2,870 million in 2018, after which there was a substantial increase to 5,680 million in 2019. Although economic profit declined to 3,371 million in 2020, it recovered to 5,003 million in 2021 and reached its highest point at 7,154 million in 2022. This trend reflects an improving ability to generate returns exceeding the cost of capital, with a notable dip in 2020 likely attributable to external economic factors.

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 Trend

Economic profit demonstrated significant fluctuation over the period analyzed. It initially increased from 2,113 million USD in 2017 to 2,870 million USD in 2018, followed by a substantial leap to 5,680 million USD in 2019. In 2020, there was a notable decline to 3,371 million USD, which was then recovered and surpassed with increases to 5,003 million USD in 2021 and 7,154 million USD in 2022. Overall, economic profit exhibited a generally upward trend, reflecting increased profitability after temporary setbacks.

Invested Capital Trends

Invested capital showed moderate variation with an initial decrease from 51,080 million USD in 2017 to 47,578 million USD in 2018. Subsequently, it rose back to 50,974 million USD in 2019 and continued to increase to 61,524 million USD in 2020. However, a slight decline was seen in 2021 to 60,806 million USD, and a marginal increase to 60,981 million USD in 2022. The overall trend indicates relative stability with some fluctuations, mainly maintaining a high level of invested capital throughout the period.

Economic Spread Ratio

The economic spread ratio followed a pattern similar to economic profit but expressed in percentage terms. It increased significantly from 4.14% in 2017 to a peak of 11.14% in 2019. A reduction occurred in 2020 to 5.48%, corresponding with the decline in economic profit that year. This ratio rebounded to 8.23% in 2021 and further increased to 11.73% in 2022, signaling an improving economic value generated relative to invested capital. The fluctuations suggest responsiveness to external conditions impacting profitability metrics but an overall strengthening economic spread in recent years.

Economic Profit

The economic profit exhibited an overall upward trend from 2017 to 2022. Starting at $2,113 million in 2017, it increased steadily to a peak of $5,680 million in 2019. There was a noticeable decline to $3,371 million in 2020, likely reflecting external challenges during that period. Subsequently, economic profit recovered and grew significantly, reaching $7,154 million by 2022, surpassing all previous levels.

Net Revenues

Net revenues demonstrated consistent growth across the six-year period. Beginning at $18,358 million in 2017, revenues rose each year with a minor dip in 2020 to $21,846 million. Afterward, revenues rebounded, reaching $29,310 million in 2022, representing a substantial increase relative to 2017.

Economic Profit Margin

The economic profit margin showed variability but an overall positive trajectory. It started at 11.51% in 2017, increased to 24.72% by 2019, before declining to 15.43% in 2020. Subsequently, the margin improved steadily, reaching a high of 24.41% in 2022. These fluctuations suggest periodic impacts on profitability efficiency, with a strong recovery post-2020.

General Observations

The data indicates that despite a disruption in 2020, both economic profit and net revenues sustained growth over the long term. The economic profit margin's recovery after 2020 points to improved cost management or pricing strategies contributing to enhanced profitability. The significant rise in economic profit in 2022, alongside increased revenues, reflects robust financial performance during the most recent period analyzed.