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MA

Mastercard NYSE:MA Stock Report

Last Price

US$354.27

Market Cap

US$338.8b

7D

-0.9%

1Y

-2.3%

Updated

12 Aug, 2022

Data

Company Financials +
MA fundamental analysis
Snowflake Score
Valuation4/6
Future Growth4/6
Past Performance5/6
Financial Health3/6
Dividends0/6

MA Stock Overview

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally.

Mastercard Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Mastercard
Historical stock prices
Current Share PriceUS$354.27
52 Week HighUS$399.92
52 Week LowUS$303.65
Beta1.04
1 Month Change9.56%
3 Month Change6.45%
1 Year Change-2.34%
3 Year Change29.13%
5 Year Change170.15%
Change since IPO7,601.52%

Recent News & Updates

Jul 29

Mastercard: Consumer Strength And Travel Recovery Continued In Q2

Q2 again saw consumer strength and Travel recovery for Mastercard; switched volume grew 26% and Travel volume grew 154%. Mastercard revenue grew 21% year-on-year, despite currency and Russia-related headwinds, and EPS grew 32% year-on-year. Management raised their full-year outlook; we believe this implies a 23% growth in EBIT this year, continuing a long-term mid-teens CAGR. Mastercard shares are trading at 41x 2021 EPS, in line with our long-term assumption; on 2022 EPS, P/E is 34x. With shares at $352.45, we expect an exit price of $644 and a total return of 86% (20.0% annualized) by 2025 year-end. Buy. Introduction Mastercard Inc. (MA) reported Q2 2022 results on Thursday (July 28), and shares closed up 2.7% that day. We initiated our Buy rating on Mastercard in April 2019. Total gain since then currently stands at 39% after just over three years, though MA’s stock price has fallen 10% in the past year: Librarian Capital's Visa Rating History vs. Share Price (Last 1 Year) Source: Seeking Alpha (29-Jul-22). Q2 marked another great quarter for Mastercard. Consumer spending was strong, and cross-border travel continued to recover. Revenues grew 21% year-on-year even after currency and Russia-related headwinds. The recovery in Travel is expected to continue, and full-year 2022 outlook was raised. Mastercard’s structural trajectory of mid-teens plus earnings growth is continuing. Our forecasts indicate a total return of 86% (20.0% annualized) by 2025 year-end. Buy. Mastercard Buy Case Recap Our investment case on Mastercard has been based on a belief that its 15%+ EPS CAGR and premium valuation would continue, driven by: Electronic payment volumes are growing structurally, from both GDP growth and the continuing shift away from cash and checks Even in the U.S. and Europe, a significant amount of consumer spending remains in cash; the potential is even greater in newer geographies Incumbent payment networks enjoy natural advantages in scale and network effects; regulations ensure a high barrier to entry Mastercard and Visa (V) are increasingly penetrating new payment verticals including Business-to-Business, Business-to-Consumer and Peer-to-Peer They are also increasingly providing value-added services that utilize their platform status and wealth of data, adding further revenue growth Payment networks have natural operational leverage, being highly scalable and having largely fixed costs, so earnings grow faster than revenues Our investment case is more conservative than the mid-term targets set out at the investor day in November 2021, which include a revenue CAGR in the high-teens, an EBIT margin of at least 50% (compared to 54.3% in 2021), and an EPS CAGR in the low 20s: Mastercard 2022-24 Targets Source: MA investor day presentation (Nov-21). COVID-19 was a significant short-term negative for Mastercard, with travel restrictions disrupting high-margin cross-border volumes, but a long-term positive, accelerating the shift to electronic payments. Q2 marked another great quarter for Mastercard, with strong consumer spending and a continuing recovery in Travel. Strong Consumer & Travel Volumes Q2 2022 was another quarter of strong consumer spending and Travel recovery. As Mastercard CEO Michael Miebach observed on the call: Unemployment rates remain low, wages are rising and consumer savings levels remain high. With this backdrop, consumer spending and particularly travel-related spending remains strong … U.S. retail spending remains healthy … In Europe, spending trends are positive … We’ve seen some shift in spends for the gas and groceries from discretionary categories like home furnishings at the U.S. Cross-border continues its strong recovery as border restrictions continue to be relaxed.” The strength in spending was reflected in volume data. Indexed to pre-COVID 2019, Mastercard total switched volume (excluding Russia) was 160% in both Q2, up from 153% in Q1; U.S. switched volume was 146%, up from 142% in Q1. Cross-Border ex. Intra-Europe Volume was 131% of 2019 level in Q2, compared to 114% in Q1: Mastercard Volume Local Growth vs. Prior Years (Since Q2 2022) Source: MA results presentation (Q2 2022). Key: XB = Cross-Border, CNP = Card Not Present, CP = Card Present. Even if we include Russia in the data, indexed to 2019 level, total switched volume was 154% and Cross-Border ex. Intra-Europe volume was 125%, showing how growth has quickly offset the loss of the relatively small Russia market. Travel recovery was strong. Total Cross-Border Travel volume was 122% of 2019 level in Q2. Both overall and cross-border volumes continue to be strong, with figures for July 1-21 being similar to those in Q2. Card-Not-Present ex-Travel volume decelerated, but more than offset by the acceleration in Cross-Border Travel. On a year-on-year basis, including Russia, Mastercard switched transactions grew 12%, switched volume grew 21% and cross-border volume grew 58% in Q2; Gross Dollar Volume (“GDV”) grew 14% (all figures in local currencies). Strong Double-Digit Revenue & EBIT Growth Strong volume growth, together with continuing growth in value-add services, generated strong growth in Mastercard’s P&L in Q2, partially offset by the strengthening U.S. dollar. In Q2, Mastercard's Net Revenues grew 21.3% and Adjusted EBIT grew 32.0%, with Adjusted EBIT margin expanding 4.7 ppt to 57.9% thanks to operational leverage. Adjusted Net Income grew 28.9% (less than EBIT due to a higher tax rate) and Adjusted EPS grew 31.6% (helped by a 2.0% reduction in the share count): Mastercard Adjusted P&L (Q2 2022 vs. Prior Periods) Source: MA results release (Q2 2022). Currency was a significant headwind, reducing revenue growth by 6 ppt and Adjusted EBIT growth by 8 ppt. Acquisitions was a 1 ppt headwind for Adjusted EBIT overall, having added 1 ppt to Net Revenue but 5 ppt to Operating Expenses. Within revenues, Domestic Assessment, Cross-Border Volume Fees and Transaction Processing all grew better than their underlying volumes, thanks to factors such as favorable geographic mix and higher currency volatility. Other Revenues grew 23% year-on-year in local currencies, helped 3 ppt by acquisitions but with the rest driven by value-add services in Cyber & Intelligence and Data & Services. Compared to pre-COVID Q2 2019, even after including the loss of Russia-related revenues and currency headwinds, Net Revenues and Adjusted EBIT have grown by about 33% in three years, while the share count was 5.0% lower. Adjusted EPS was 35.7% higher. These figures also represent an incomplete recovery in parts of Travel. Recovery in Travel Still Incomplete While overall Travel volumes have grown beyond pre-COVID levels, key regions and routes have lagged their historical trajectories or even in absolute terms. As CFO Sachin Mehta explained on the call: Based on our switched volumes, Asia, which represented approximately 14% of cross-border inbound travel in 2019 is only at approximately 60% of 2019 levels in Q2. Similarly, the U.S., UK and Canada, which represented approximately 20% of cross-border inbound travel in 2019 is at about 110% of 2019 levels, still well below the historical trajectory.” There is thus more room for Travel volumes to grow. Management “expect a modest improvement in cross-border travel versus 2019 levels and a generally resilient consumer spending through the remainder of 2022”, and raised their 2022 outlook. Raised FY22 outlook Management raised their full-year outlook, which we believe implies an EBIT growth in the low 20s (was around 20%). On a non-GAAP, currency-neutral and organic basis, Mastercard raised its expected growth of Net Revenue from “high-end of high-teens” to “low-twenties”, and that of Operating Expense from “high-single-digits” to “low-end of low-double-digits”. The expected currency impact was also raised by 1 ppt, while the impact from acquisitions was adjusted slightly: Mastercard 2022 Outlook (New vs. Previous) Source: MA results presentation (Q2 2022).

Jul 20
Is Mastercard (NYSE:MA) A Risky Investment?

Is Mastercard (NYSE:MA) A Risky Investment?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Jul 18

Mastercard and D-Wave collaborate for quantum computing solutions

Mastercard (NYSE:MA) and D-Wave Systems, provider of quantum computing systems, software, and services, and the only company building both quantum annealing and gate-based quantum computers, announced a multi-year strategic alliance for the acceleration and adoption of quantum computing solutions. Both the companies will collaborate on R&D of quantum-hybrid applications in consumer loyalty and rewards, cross-border settlement and fraud management. The collaboration will use D-Wave’s annealing quantum computers and quantum hybrid solvers through the Leap quantum cloud service to deliver real-time access to quantum applications safely and securely powered by Mastercard’s network.

Shareholder Returns

MAUS ITUS Market
7D-0.9%0.3%1.3%
1Y-2.3%-27.3%-11.7%

Return vs Industry: MA exceeded the US IT industry which returned -27.3% over the past year.

Return vs Market: MA exceeded the US Market which returned -11.7% over the past year.

Price Volatility

Is MA's price volatile compared to industry and market?
MA volatility
MA Average Weekly Movement4.1%
IT Industry Average Movement9.6%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: MA is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: MA's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196624,000Michael Miebachhttps://www.mastercard.com

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers other payment-related products and services. The company offers integrated products and value-added services for account holders, merchants, financial institutions, businesses, governments, and other organizations, such as programs that enable issuers to provide consumers with credits to defer payments; prepaid programs and management services; commercial credit and debit payment products and solutions; and payment products and solutions that allow its customers to access funds in deposit and other accounts.

Mastercard Fundamentals Summary

How do Mastercard's earnings and revenue compare to its market cap?
MA fundamental statistics
Market CapUS$338.79b
Earnings (TTM)US$9.70b
Revenue (TTM)US$20.87b

35.3x

P/E Ratio

16.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MA income statement (TTM)
RevenueUS$20.87b
Cost of RevenueUS$0
Gross ProfitUS$20.87b
Other ExpensesUS$11.17b
EarningsUS$9.70b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)10.04
Gross Margin100.00%
Net Profit Margin46.48%
Debt/Equity Ratio231.3%

How did MA perform over the long term?

See historical performance and comparison

Dividends

0.6%

Current Dividend Yield

19%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is MA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MA?

Other financial metrics that can be useful for relative valuation.

MA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue16.6x
Enterprise Value/EBITDA27.5x
PEG Ratio2.3x

Price to Earnings Ratio vs Peers

How does MA's PE Ratio compare to its peers?

MA PE Ratio vs Peers
The above table shows the PE ratio for MA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average49x
V Visa
30.6x12.3%US$437.2b
ADP Automatic Data Processing
36.2x8.7%US$106.7b
PYPL PayPal Holdings
56.9x28.8%US$116.9b
FIS Fidelity National Information Services
73.4x23.3%US$62.1b
MA Mastercard
35.3x15.1%US$342.4b

Price-To-Earnings vs Peers: MA is good value based on its Price-To-Earnings Ratio (35.3x) compared to the peer average (49.3x).


Price to Earnings Ratio vs Industry

How does MA's PE Ratio compare vs other companies in the US IT Industry?

Price-To-Earnings vs Industry: MA is expensive based on its Price-To-Earnings Ratio (35.3x) compared to the US IT industry average (30.2x)


Price to Earnings Ratio vs Fair Ratio

What is MA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MA PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio35.3x
Fair PE Ratio44.5x

Price-To-Earnings vs Fair Ratio: MA is good value based on its Price-To-Earnings Ratio (35.3x) compared to the estimated Fair Price-To-Earnings Ratio (44.5x).


Share Price vs Fair Value

What is the Fair Price of MA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MA ($354.27) is trading below our estimate of fair value ($449.86)

Significantly Below Fair Value: MA is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Mastercard forecast to perform in the next 1 to 3 years based on estimates from 32 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


15.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MA's forecast earnings growth (15.1% per year) is above the savings rate (1.9%).

Earnings vs Market: MA's earnings (15.1% per year) are forecast to grow faster than the US market (14.4% per year).

High Growth Earnings: MA's earnings are forecast to grow, but not significantly.

Revenue vs Market: MA's revenue (14.5% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: MA's revenue (14.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MA's Return on Equity is forecast to be very high in 3 years time (146.4%).


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Past Performance

How has Mastercard performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


14.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MA has high quality earnings.

Growing Profit Margin: MA's current net profit margins (46.5%) are higher than last year (43.2%).


Past Earnings Growth Analysis

Earnings Trend: MA's earnings have grown by 14.8% per year over the past 5 years.

Accelerating Growth: MA's earnings growth over the past year (34.9%) exceeds its 5-year average (14.8% per year).

Earnings vs Industry: MA earnings growth over the past year (34.9%) exceeded the IT industry 20.7%.


Return on Equity

High ROE: Whilst MA's Return on Equity (154.89%) is outstanding, this metric is skewed due to their high level of debt.


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Financial Health

How is Mastercard's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: MA's short term assets ($15.2B) exceed its short term liabilities ($12.1B).

Long Term Liabilities: MA's short term assets ($15.2B) do not cover its long term liabilities ($17.9B).


Debt to Equity History and Analysis

Debt Level: MA's net debt to equity ratio (129.7%) is considered high.

Reducing Debt: MA's debt to equity ratio has increased from 89.5% to 231.3% over the past 5 years.

Debt Coverage: MA's debt is well covered by operating cash flow (68.9%).

Interest Coverage: MA's interest payments on its debt are well covered by EBIT (28x coverage).


Balance Sheet


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Dividend

What is Mastercard current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


0.55%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MA's dividend (0.55%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.49%).

High Dividend: MA's dividend (0.55%) is low compared to the top 25% of dividend payers in the US market (4%).


Stability and Growth of Payments

Stable Dividend: MA is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: MA is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Earnings Payout to Shareholders

Earnings Coverage: MA is not paying a notable dividend for the US market.


Cash Payout to Shareholders

Cash Flow Coverage: MA is not paying a notable dividend for the US market.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure


CEO

Michael Miebach (54 yo)

2.42yrs

Tenure

US$16,120,055

Compensation

Mr. Michael Miebach serves as President of Mastercard Incorporated from March 01, 2020. He has been Chief Executive Officer and Director of Mastercard Incorporated since January 01, 2021. He served as the...


CEO Compensation Analysis

Compensation vs Market: Michael's total compensation ($USD16.12M) is about average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Michael's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: MA's management team is considered experienced (3.8 years average tenure).


Board Members

Experienced Board: MA's board of directors are considered experienced (4.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Mastercard Incorporated's employee growth, exchange listings and data sources


Key Information

  • Name: Mastercard Incorporated
  • Ticker: MA
  • Exchange: NYSE
  • Founded: 1966
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Implied Market Cap: US$338.792b
  • Shares outstanding: 966.38m
  • Website: https://www.mastercard.com

Number of Employees


Location

  • Mastercard Incorporated
  • 2000 Purchase Street
  • Purchase
  • New York
  • 10577
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.