<div id="readability-page-1">Visa (V 0.57%) stock has been down over the last few months due to concerns about weakening consumer spending. The company's recent earnings results missed analysts' revenue estimates, coming in $200 million below expectations. In addition, the company saw a further deceleration in U.S. consumer spending in July, leading many analysts to lower their price targets in response. The stock has fallen by 11% since March and faces some near-term headwinds, but investors could have a good opportunity to buy today. Here's why. <h2>All eyes are on the consumer</h2> In Visa's third quarter (ended June 30), the payment titan posted solid results, growing net revenue by 10% year over year and its GAAP earnings per share (EPS) by 20%. However, the company's $8.9 billion in revenue came in slightly below consensus estimates. Investors were also focused on the weakening of the marginal consumer. Visa's results showed that payment volume of 7% decelerated slightly from the same quarter last year when growth was around 9%. One contributing factor to this slower growth was U.S. consumer spending, which increased 4.5% in the third quarter, down from 5.6% growth in the previous quarter. U.S. consumer spending slowed further in July, with growth around 4%. Consumer spending trends have slowed, but there are mixed signals. On a larger scale, consumers continue spending, but the trends diverge depending on the consumer. Those on the higher end of the earning spectrum have been okay, while those on the lower end have struggled more. According to Chris Suh, Visa's chief financial officer, &#34;growth in the high-spend consumer segment remained stable compared to prior quarters; we saw a slight moderation in the lower-spend consumer segment.&#34; <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODQ5MDgvZ3JvY2VyeS1zdG9yZS1jcmVkaXQtY2FyZC10cmFuc2FjdGlvbi5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODQ5MDgvZ3JvY2VyeS1zdG9yZS1jcmVkaXQtY2FyZC10cmFuc2FjdGlvbi5qcGcmdz03MDA"/>Image source: Getty Images. </div> According to a report by the Federal Reserve Bank of New York, earners in the lower income quartile are more likely to have maxed out their cards, at 12.3% interest, while only 5.5% of those in the highest quartile have. Maxed-out borrowers will feel the pinch in spending more than others and are more likely to see their loan balances go delinquent. Investors will want to monitor these spending trends, which could indicate a potential recession if the deceleration continues. If consumer spending deteriorates, Visa, which earns a fee every time its card is swiped, could see its earnings take a hit. However, Visa management isn't too concerned about the trends. Suh noted that &#34;a number of smaller factors such as weather, timing of promotional shopping events, and the technology outage&#34; contributed to lower spending in July. One positive is that Visa doesn't hold the debt risk associated with its credit cards. The company helps facilitate spending through its card network, partnering with banks for its card products, but it doesn't take on any credit risk. Instead, the banks hold on to those loans, and a rise in delinquencies would hurt them more than Visa. This is also a big reason Visa commands a higher valuation than Capital One or American Express, which do hold credit card debt. Another possible overhang for Visa stock is its settlement deal with merchants related to a class action antitrust lawsuit that goes back to 2005. Visa and competitor Mastercard had agreed to settle the lawsuit with a $30 billion settlement. However, a federal judge rejected the settlement, which means the card companies will likely have to make more concessions to resolve the dispute. <h2>Is Visa a buy?</h2> The recent headwinds and stock sell-off have Visa priced at a more reasonable valuation compared to earlier in the year. Today, Visa stock trades at a price-to-sales (P/S) ratio of 15.2 and a price-to-earnings (P/E) ratio of 27.8, both of which are slightly below its 10-year averages on these metrics. Based on next year's earnings estimate, Visa is priced at just 12.8 times sales and 23.4 times earnings. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/b600cba40dc2ef9b5e4fb96966550e3a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="507" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/b600cba40dc2ef9b5e4fb96966550e3a.png"/> V PE Ratio data by YCharts. Visa could face near-term headwinds from slower U.S. consumer spending, which is something to keep an eye on. However, other results during the period were positive: <ul> <li>Revenue and net income grew nicely, and cross-border volume was up 14%.</li> <li>Visa's global expansion efforts continue to pay off as it grows its partnerships and value-added services with several banks and fintech partners worldwide.</li> <li>The business continues to exhibit strong network effects.</li> <li>Its margins are excellent.</li> <li>Visa is well positioned, as the global card payment market is projected to grow 8.5% compounded annually through 2032.</li> </ul> With its valuation coming down, now looks like a good time to buy some shares. You can add more if it dips further from here. </div>

Visa's stock has fallen 11% since March due to concerns about weakening consumer spending. However, the company's recent earnings showed solid growth in net revenue and earnings per share. While there are near-term headwinds, Visa is well-positioned for global expansion and the growing card payment market. With its valuation becoming more reasonable, now may be a good time to buy shares.

- Visa stock has declined recently due to concerns about weakening consumer spending, with earnings missing revenue estimates by $200 million. U.S. consumer spending decelerated, leading analysts to lower price targets. Despite near-term challenges, Visa's solid third-quarter results showed growth in revenue and earnings, although slightly below estimates, reflecting a slowdown in payment volume growth. 
- Lower-income earners facing credit card debt challenges could impact Visa's earnings if spending trends worsen. However, Visa's business model shields it from credit risks, maintaining a higher valuation compared to competitors. The stock faces potential headwinds from a pending settlement deal and slower consumer spending but remains attractively priced for investors.
- Visa's positive revenue growth, expanding global partnerships, and strong network effects position it well for future growth despite short-term uncertainties. With a more reasonable valuation and growth prospects in the global card payment market, now could be a favorable time to consider investing in Visa shares.

Visa Stock Is Down 11% Since March. Should Investors Buy the Dip?