Visa (NYSE:V) has had a strong year on the markets in 2019, rising more than 41% in value. However, that’s also sent the stock to a new 52-week high and perhaps priced itself out of the portfolios of many value-oriented investors in the process.
In its Q4 earnings release, the company’s net revenues were up just 13% form the prior-year quarter. And for the full year, net revenue of $23 billion was up just 11% from fiscal 2018.
Those are decent growth numbers, but with shares of Visa trading at 35 times their earnings, that puts its share price at a hefty premium. Normally, the higher the price-to-earnings (P/E) ratio, the higher the growth we’d expect to see from the company, and 11% doesn’t exactly scream high growth.
The other danger for investors is that as consumers continue to pile on debt and if a recession does end up hitting in the next year or two, Visa could be in tough shape as the company may have a harder time collecting on its debts. With possible headwinds impacting its future growth, its sales numbers may not be as strong in the coming quarters.
While the business itself is solid, Visa’s stock is just too expensive to buy today. And with a modest dividend yielding just 0.6%, there’s also not a whole lot of incentive to hold onto the stock for the long term and wait for things to get better. There are many other dividend stocks investors can choose from that will provide better yields.