Visa (V): Q3 2026 results, my verdict

2026-07-28 · By Lubin Danilo, founder of Lubin Investment

V: see the full analysis on Lubin Investment

Visa reported on July 28, 2026 net revenue of $11.6 billion (+14%) and double-digit EPS growth, driven by core payments and a marked acceleration in its stablecoin-related business. My quality screen stays very favorable, but my valuation model puts the stock roughly 27% above a reasonable buy price. Here is why.

What just happened: a solid quarter, driven by payments and stablecoins

Visa reported after market close on July 28, 2026 its fiscal third-quarter results (period ended June 30, 2026): net revenue of $11.6 billion, up 14% year over year, GAAP EPS of $2.97 (+7%), and adjusted EPS of $3.32 (+11%). The growth mix is classic Visa: higher payment volumes, strong cross-border activity, and a rising number of processed transactions. Nothing spectacular in the core business, but everything is solidly trending up.

The real story of the quarter lies elsewhere: Visa now runs more than 160 stablecoin-linked card programs (digital tokens pegged to a traditional currency like the dollar) with partners such as Rain, Reap, and Bridge, and payment volume through those programs jumped almost 200% year over year. Even more telling: Visa now settles part of the transactions between its roughly 14,500 financial institution clients directly in stablecoins, at an annualized pace of about $7 billion, up more than 50% in a single quarter. CEO Ryan McInerney summed up the company's philosophy on the topic: 'The stablecoin opportunity remains additive to what Visa is doing today,' pointing to complementary use cases (on-ramps and off-ramps, settlement, money movement, consulting) rather than a replacement of the existing network.

Why my quality screen validates 21 out of 25 criteria

For very large companies like Visa, where rich qualitative data is available (governance, competitive position, capital allocation), my screen expands from its usual 10-criteria model to 25, to capture more nuance. Visa passes 21. The raw fundamentals are excellent: a net margin of 51.7% (out of every $100 of revenue, more than half ends up as net profit, a level almost no industrial company gets close to), 11.9%/year sales growth over five years, 14.2%/year free cash flow per share growth, and a share count declining 3.6%/year thanks to steady buybacks.

The mechanism behind this outsized profitability: Visa never lends money to anyone. It only routes the transaction information between the bank that issued the card and the merchant's bank, collecting a network fee along the way. This is called an 'open-loop' network, as opposed to a closed-loop network like American Express, which lends directly to its cardholders and therefore carries default risk on its own balance sheet (as I detailed in my American Express results analysis). The result for Visa: a Cash ROCE (the return on capital actually reinvested in the business) of 60.4%, and net debt that would take just 0.57 years of free cash flow to repay, essentially a risk-free balance sheet.

Two points still cause certain criteria to fail. First, operating margin is compressing slightly over five years: costs (notably incentive payments to partner banks and technology investment in new payment rails) are growing a bit faster than revenue, a signal worth watching without being alarming at this stage. Second, two governance criteria fail: CEO Ryan McInerney has only been in the role since February 2023 (3.2 years, below the 5-year threshold I prefer for judging a track record of decisions), and he owns only 0.015% of the company's shares, a limited personal alignment of interests compared to founders who retain large stakes.

The price: expensive versus its own history, not in absolute terms

Visa currently trades at 37.2 times its trailing-twelve-month free cash flow. On its own, that number says nothing: it needs to be compared against the stock's own history. Over the past five years, this multiple has sat both well below and well above today's level; the current reading sits at the 71.6th percentile of that range, meaning it is more expensive than 71.6% of trading days over the past five years. That is not an all-time high, but it is clearly the upper end of this specific stock's usual range.

My reasonable buy-price model, which projects the actual five-year cash generation trajectory per share to estimate what the stock should be worth today, comes out at $267.64, versus a current price of $366.59: a roughly 27% premium. The question to settle is simple: does this quarter's stablecoin momentum justify paying a premium over Visa's own history? If this new revenue source proves durable and lifts the next five years' growth trajectory above the last five, today's premium will be justified in hindsight. But for now, it is confirmed by only one quarter of signals, not by the kind of multi-year trend my model relies on to decide.

What could derail the thesis over the medium term

The most commonly cited risk for Visa is regulatory: interchange fees (the commission collected on every transaction) are regularly challenged by merchants and regulators in both the US and Europe, and any imposed cut would directly hit margins. The more structural, and more interesting, risk is almost paradoxical: the stablecoins Visa presents today as an opportunity could, over the very long term, let two parties exchange value directly, without going through a card network at all. Visa is betting that its role as trusted plumbing (compliance, conversion, security) will remain necessary even in that world; that is a reasonable bet given its head start, but a real bet, not a certainty.

Visa reported on July 28, 2026 net revenue of $11.6B (+14%) and adjusted EPS of $3.32 (+11%), driven by core payments and strong stablecoin momentum (interbank settlement at a $7B annualized pace, +50% in one quarter).
My quality screen validates 21 out of 25 criteria: 51.7% net margin, 60.4% Cash ROCE, near-zero debt (0.57 years of FCF). Two weak points: slightly compressing operating margin and governance (CEO in the role for only 3.2 years, 0.015% share ownership).
The 37.2x P/FCF sits at the 71.6th percentile of Visa's own 5-year history: expensive for this specific stock. My model targets a $267.64 buy price against a $366.59 current price, a 27% premium.
The real bet: are stablecoins an additive growth engine (Visa's scenario) or a long-term threat to the card network model? This is not investment advice, do your own research.

FAQ

Why does Visa carry almost no debt?

Because its open-loop network model never requires it to lend money to anyone: it only routes payment information between banks and collects fees along the way. Its net debt would take just 0.57 years of free cash flow to repay.

What is Visa's stablecoin settlement business?

A stablecoin is a digital token pegged to a traditional currency like the dollar. Visa uses it to settle certain transactions between its 14,500 financial institution clients faster and cheaper than through traditional banking rails, now at a pace approaching $7 billion per year.

Why is Visa's P/FCF considered expensive if it is not at an all-time high?

Because I always compare a multiple to the stock's own history, not to a universal threshold. At 37.2 times, Visa is more expensive than 71.6% of trading days over the past five years: not a record, but clearly the upper end of its usual range.

Should you buy Visa stock after these results?

The quality of the business is real and hardly debatable. But my reasonable buy-price model, based on five years of actual cash generation, targets $267.64 against a $366.59 price, a 27% premium. Paying that premium means betting that stablecoin momentum will durably lift future growth above the past. This is not personalized investment advice, do your own research.

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).