Visa Has Grown Earnings per Share by 17% a Year for a Decade. Can the Stock Keep Compounding?

While investors continue to focus extensively on the artificial intelligence trade, Visa (NYSE: V) keeps humming along. The company has performed well for so long that it's easy to take it for granted.

From fiscal 2016 through fiscal 2026 (ended Sept. 30), this business grew its diluted earnings per share (EPS) at an annualized rate of 17.4%. This has been a powerful catalyst that helped drive the stock price's 459% total return during the past decade (as of Nov. 4).

Visa is a true compounding machine. But can the financial stock keep it up?

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The growth story hasn't changed

What's worth mentioning about Visa's EPS gains is that they haven't slowed down at all. In fiscal 2026, this metric was up 21%. It was lifted by revenue that jumped 15%, boosted by a 9% increase in payment volume. Sell-side analysts expect adjusted EPS to grow at a compound annual rate of 13.7% over the coming three fiscal years.

Despite having billions of cards in circulation and virtually ubiquitous acceptance, Visa's expansion runway is still huge. According to research from Bill Ackman's Pershing Square Capital Management, the business has tapped only half of its total addressable market, as measured by global consumer card payment volume.

That tailwind of rising penetration of cashless transactions remains critical to Visa's success. A decade from now, I'd be shocked if it still isn't a key part of the company's story.

However, this doesn't mean that there aren't any new developments to keep an eye on. Visa's value-added services, which include issuing, acceptance, risk, security, and advisory solutions, are becoming more important. Sales here surged 30% year over year during the fiscal year.

Visa has been innovating with stablecoins. It has already integrated this capability into its network. Furthermore, the leadership team is working on agentic commerce solutions by building platforms and entering into partnerships to support adoption. While these projects likely won't materially contribute to Visa's financial performance anytime soon, they clearly show how quickly the business is willing to try new things.

Investors must decide what valuation makes sense

Visa shares have generated a total return of 459% in the past 10 years, as noted. The stock is poised to continue its winning ways over the next decade. It's reasonable to expect the business to report double-digit annualized EPS gains in the future.

But investors should lower their expectations. Growth will naturally moderate compared to past trends as Visa further takes share from cash and paper-based transactions.

The valuation isn't a bargain either. The stock trades at a forward price-to-earnings ratio of 27.5. Investors must decide if this entry point makes sense.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.