Mastercard (MA): Valuation Check After $14 Billion Buyback, Dividend Hike and New Payments Partnerships

Mastercard (MA) just doubled down on its confidence, rolling out a new $14 billion buyback and a 14% dividend hike, right as it inks fresh growth partnerships with TerraPay and WooCommerce.

See our latest analysis for Mastercard.

Those buybacks and partnerships are landing against a solid backdrop, with the share price at $571.93 after a strong recent rebound and a roughly high single digit year to date share price return. At the same time, the multi year total shareholder return still signals powerful long term momentum rather than a fading story.

If Mastercard's mix of digital payments growth and capital returns has your attention, this is also a good moment to explore fast growing stocks with high insider ownership for other potential standout names.

With Mastercard still growing revenue at double digits and trading at roughly a 10 to 15 percent discount to bullish analyst targets, investors now face a pivotal question: Is this a genuine entry point, or is all that future growth already baked in?

Most Popular Narrative: 12.9% Undervalued

With the narrative fair value sitting materially above Mastercard's last close, the valuation case depends on how far its earnings engine can keep stretching.

The analysts have a consensus price target of $644.552 for Mastercard based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $690.0, and the most bearish reporting a price target of $520.0.

Read the complete narrative.

Want to see what kind of revenue climb, margin expansion, and earnings power are being reflected in that gap? The full narrative outlines the details.

Result: Fair Value of $656.51 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to watch rising regulatory scrutiny, as well as the rapid adoption of local real time payment rails, which could chip away at Mastercard's volume growth.

Find out about the key risks to this Mastercard narrative.

Another Angle on Valuation

On raw pricing, Mastercard looks far less forgiving. Its price to earnings ratio sits around 36x, versus 13.6x for the US diversified financials sector and a fair ratio of 19.8x. This suggests the market is already paying a hefty premium. Is that premium a cushion or a risk?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Mastercard Narrative

If this take does not fully match your view, or you want to dig into the numbers yourself, you can build a custom narrative in under three minutes, Do it your way.

A great starting point for your Mastercard research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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