The Zacks Analyst Blog Highlights Visa and Affirm Holdings
Chicago, IL – July 23, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Visa Inc. V and Affirm Holdings, Inc. AFRM.
Here are highlights from Tuesday's Analyst Blog:
Visa vs. Affirm: Old School & FinTech - Who Wins the Payment War?
Visa Inc. and Affirm Holdings, Inc. both are now operating at the forefront of the payments landscape, one as a decades-old card network with global scale, the other as a fast-growing fintech innovator in buy now, pay later (BNPL). Visa processes trillions in consumer and commercial payments each year, earning reliable fee-based revenues. Affirm, by contrast, has carved out a niche financing model that embeds point-of-sale loans directly into e-commerce checkouts.
With growing competition from Big Tech and evolving consumer preferences, investors must decide whether Visa's entrenched network or Affirm's disruptive momentum offers better upside. Let's dive deep and closely compare their fundamentals to determine which stock is the stronger investment opportunity today.
The Case for Visa
Visa remains a dominant force in global payments, operating one of the most extensive and secure card payment networks in the world.It reported second quarter fiscal 2025 net revenue of $9.6 billion, up 9.3% year-over-year on an 8% gain in payments volume and strong cross-border growth. Its durable competitive moat lies in its sprawling global network, which captures more than half of purchase volume in the United States and billions of digital transactions.
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Its entrenched global reach, strong brand trust and deep integration with financial institutions continue to make it a backbone of the traditional payments ecosystem.Management bolstered shareholder returns with $5.6 billion in buybacks in the last reported quarter and a fresh $30 billion repurchase authorization, underscoring cash-flow strength.
Beyond core card transactions, Visa is pushing into digital payments through Visa Direct, tapping into peer-to-peer and business payouts. It is also investing in real-time payments infrastructure and API-based solutions to remain relevant in a rapidly digitizing financial landscape. However, Visa's growth is naturally tied to the pace of consumer spending and cross-border transactions, both of which are increasingly vulnerable to economic cycles and inflation pressures.
Additionally, Visa's business model is primarily fee-based and intermediated, dependent on banks, merchants and processors. This layered structure contrasts with the emerging direct-to-consumer models that fintech disruptors are leveraging to sidestep traditional rails. As the payments landscape shifts toward embedded finance and alternative credit models, Visa's legacy advantage may be less compelling for tech-savvy Gen Z and millennial consumers seeking speed, flexibility and something fresh.
The Case for Affirm
Affirm represents the modern alternative to traditional credit cards, with its BNPL model reshaping how consumers finance purchases. In fiscal third-quarter 2025, Affirm's revenues improved 36% year over year to $783.1 million, driven by higher gross merchandise volume (GMV) and expanded merchant relationships. Its active consumer count rose to 21.9 million, and transactions per active user grew by 21.7%, showing rising engagement and repeat usage. Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
What makes Affirm structurally compelling is its ability to operate outside the traditional credit-card networks. Its partnerships with Shopify, Amazon, Costco and Apple allow it to plug directly into consumer spending. Affirm's AI-powered underwriting tools and real-time risk assessment give it the agility to approve users more accurately and scale profitably. Unlike Visa, which largely benefits from payment routing, Affirm profits from originating and managing consumer credit directly.
The company's diversified funding model, including 24 securitizations totaling $12.25 billion and relationships with 150+ capital partners, underscores its growing operational maturity. And while Affirm is not yet consistently profitable for a long period, its investments in automation, gen AI, and merchant analytics tools are positioning it for long-term operating leverage. With younger demographics favoring transparent instalment payments, Affirm is well-aligned with consumer trends.
Internationally, Affirm is scaling through a strategic partnership with Shopify to enter Western Europe, following its U.K. launch. With more than 358,000 merchant partners, this global push opens up significant new revenue streams. Affirm is also broadening its ecosystem beyond core BNPL, investing in debit card offerings and B2B tools to further diversify business.
AFRM's long-term debt-to-capital of 71.8% is significantly higher than Visa's 30.7%, but that is not entirely unexpected for the fintech, still scaling operations. Affirm's high leverage reflects its aggressive growth strategy and non-bank structure, which is normal for its business model, but also means higher interest expense risk and greater exposure to credit market tightening.
How Do Zacks Estimates Compare for V & AFRM?
The Zacks Consensus Estimate for Affirm's bottom line is comparably favorable at this stage. The consensus estimate for V's fiscal 2025 earnings indicates a 13.1% increase from a year ago, while the same for revenues suggests 10.3% growth. On the other hand, the Zacks Consensus Estimate for Affirm's fiscal 2025 EPS indicates 101.8% year-over-year improvement, and the same for revenues signals a 37.1% rise.
Valuation: V vs. AFRM
On a price-to-sales basis, Visa sits at 15.04X forward revenues, significantly above the industry average of 6.30X. By contrast, Affirm's price-to-sales multiple is at 5.41X, in line with its high growth fintech peers. Affirm's cheaper P/S multiple leaves room for significant growth as business expansion accelerates.
Price Performance Comparison
Visa has returned 32.5% in the past year, buoyed by resilient spending trends and market optimism. Affirm, meanwhile, has delivered a massive 127.5% return, driven by its outsized revenue growth and positive guidance surprises. Both have outperformed the industry and the S&P 500 Index during this time.
Conclusion
While Visa with a Zacks Rank #2 (Buy), continues to dominate global payments with scale, profitability and unmatched trust, its model is comparatively mature and tethered to the pace of economic activity. Affirm, in contrast, is riding structural tailwinds, consumer credit disruption, embedded finance and a flexible payment demanding user base.
Affirm's significant revenue growth, expanding merchant base and growing user engagement point to accelerating momentum. Its nimble, vertically integrated platform gives it more control over the customer experience, and its recent international push and AI investments signal it is just getting started.
Yes, Affirm carries higher leverage and is still scaling, but its valuation reflects that upside potential. Given its faster growth trajectory, more favorable Zacks estimates and outperformance in the stock market, Affirm currently offers more compelling upside for investors seeking the next phase of fintech and payments evolution. AFRM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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