Visa DCF Analysis: Intrinsic Value vs Price Reveals Modest Overvaluation

Visa Inc's (V) price performance has been impressive, up 6.3% year-to-date and 8.7% over the past year.

However, a DCF analysis using both earnings-based and free cash flow (FCF)-based models reveals a divergence in their valuations of the company.

The DCF Earnings-based model uses a two-stage approach to estimate Visa's intrinsic value, projecting 16.0% growth for the next ten years followed by 4% terminal growth for the subsequent ten years.

According to this model, Visa's intrinsic value is $305.36, indicating that it is modestly overvalued at its current price of $370.45, with a margin of safety of -21.3%.