Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The last earnings update was 57 days ago. More info.
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$6,624.60||$7,500.97||$8,450.50||$9,512.50||$10,663.00|
|Source||Analyst x12||Analyst x10||Analyst x2||Analyst x2||Analyst x2|
Discounted (@ 9.34%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $10,663 × (1 + 2.47%) ÷ (9.34% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
$134,023 = $32,275 + $101,748
Value = Total value / Shares Outstanding ($134,023 / 1,044)Discount to Share Price
Value per share (USD): $128.38
Current discount (share price of $191.17): -48.91%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.34% = 2.47% + (0.913 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($199,575,943,143).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.913 = 0.885 (1 + (1- 2.7%) (3.24%))
Levered Beta used in calculation = 0.913
Mr. Ajaypal S. Banga, also known as Ajay, has been the Chief Executive Officer and President of Mastercard Incorporated since July 1, 2010 and August 31, 2009 respectively. Mr. Banga has been the Chief Executive Officer and President of Mondex International Ltd. since July 1, 2010 and August 31, 2009, respectively. He serves as the Chief Executive Officer and President of MasterCard International Incorporated. He served as the Chief Operating Officer of Mastercard Incorporated from August 31, 2009 to July 1, 2010. He served as the Chief Operating Officer of Mondex International Ltd. from August 31, 2009 to July 1, 2010. He served as the Chief Operating Officer of MasterCard International Incorporated. He joined MasterCard in 2009. Mr. Banga served as the Chief Executive Officer of Asia Pacific Region at Citibank Singapore Limited, a subsidiary of Citigroup Inc. He served as the Chairman of the Board and Chief Executive Officer of Global Consumer Group, International at Citigroup Finance Canada Inc. from August 2005 to 2008 and Citigroup Inc. since August 2005. He spent 13 years at Citibank, where he served as Chief Executive Officer of Citi Asia Pacific and was responsible for all its business lines in the region, including institutional banking, alternative investments, wealth management, consumer banking and credit cards. Mr. Banga served as the Chief Executive Officer of Asia Pacific Region at Citigroup Inc. until June 2009 and Head of Alternative Investments for Asia Pacific Region since August 2008. His responsibilities included all credit card, retail banking and consumer finance operations in Asia, Japan, Europe/Middle East/Africa, Latin America and Mexico at Citigroup. He served as the Head of International Consumer Business, New York at Citigroup Inc. until August 2008. Mr. Banga served as an Executive Vice President of Global Consumer Group at Citigroup and President of Retail Banking North America since 2002. Since 2002, he had additional responsibility for the servicing and technology of all the real estate businesses in the consumer bank. He was responsible for branch and commercial banking, commercial real estate, commercial financing and leasing, mortgages, student loans and the Primerica Financial Services distribution channel. He served as the Business Head for CitiFinancial and the US Consumer Assets Division from 2000 to 2002 and as Division Executive for consumer bank in Central/Eastern Europe, Middle East, Africa and India from 1998 to 2000. Mr. Banga began his business career as a Management Trainee at Nestlé, India, where for 13 years he worked on assignments spanning sales, marketing and general management. He spent the next 13 years in a variety of assignments spanning sales, marketing and general management. He spent two years at Pepsico, where he was instrumental in launching its fast food franchises in India as the economy liberalized. He joined Citifinancial in 1996 as Head of Marketing and Sales in India and as Head of its Sales, Marketing and Business Development for Europe, Middle East and Africa, based in Brussels. He is Director of the American Red Cross. He is Co-founder of Cyber Readiness Institute. He served as the Chairman and Chief Executive Officer of Foreign Consumer Business of Citigroup Inc. He was Business Sponsor of Citi's African heritage network, NYC. From 2005 to mid-2009, he spearheaded Citi's strategy in the microfinance sector around the world. He served as Chairman of U.S.– India Business Council and serves as its Member. Mr. Banga served as Vice Chairman of the New York Hall of Science. He has been an Independent Director of Mastercard Incorporated since April 12, 2010. He serves as a Director of MasterCard International Incorporated and New York City Ballet, Inc. He serves as a Trustee of the National Urban League, Enterprise Community Partners and the Asia Society. He serves as a Director of The Partnership for New York City, Inc and serves as its Co-Chair and a Director of Mondex International Limited. Mr. Banga is a member of the Board of Overseers of the Weill Cornell Medical College. He has served on the board of trustees of the Asia Society, the New York Hall of Science and among others. He served as a Director of The Dow Chemical Company since February 19, 2013 to August 31, 2017. He served as a Director of Mondelez International, Inc. from January 2007 to May 23, 2012. He served as a Director for the Council for Economic Education. He served as a Director of Foreign Consumer Business of Citigroup Inc. He served as a Director of Kraft Foods Inc. from January 2007 to May 23, 2012. He is a member of the Council on Foreign Relations, the International Advisory Board of the Moscow School of Management (Skolkovo), The Economic Club of New York and The Financial Services Roundtable. He is a Member of President’s Advisory Committee for Trade Policy and Negotiations (U.S.). He was a member of President’s Commission on Enhancing National Cybersecurity (U.S.). He is a Member, materials advisory committee of the Board of Directors, DowDuPont, Inc. He is Vice Chairman of The Business Council. He is Founding Trustee of U.S.-India Strategic Partnership Forum. He has a keen interest in social development issues. He was named by The Economic Times of India as the fourth "Most Powerful Indian" in the world. He is a fellow of the Foreign Policy Association and was awarded the Foreign Policy Association Medal in 2012. Mr. Banga graduated with a BA in Economics Honors from Delhi University and received an MBA from the Indian Institute of Management in Ahmedabad, India.
Average tenure and age of the Mastercard management team in years:
Average tenure and age of the Mastercard board of directors in years:
Check out our latest analysis for Mastercard Breaking down ROE — the mother of all ratios Return on Equity (ROE) weighs Mastercard’s profit against the level of its shareholders’ equity. … Return on Equity = Net Profit ÷ Shareholders Equity ROE is measured against cost of equity in order to determine the efficiency of Mastercard’s equity capital deployed. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NYSE:MA Last Perf May 11th 18 The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses.Simply Wall St - – Full article
Mastercard is trading at price-to-earnings (PE) ratio of 49.75x, this tells us the stock is overvalued compared to the US market average ratio of 18.68x , and overvalued based on current earnings compared to the it industry average of 25.38x. … NYSE:MA PE PEG Gauge Mar 18th 18 We understand MA seems to be overvalued based on its current earnings, compared to its industry peers. … This means that, when we account for Mastercard's growth, the stock can be viewed as overvalued , based on the fundamentals.Simply Wall St - – Full article
Below is a brief commentary on my key takeaways on how market analysts view Mastercard's earnings growth trajectory over the next couple of years and whether the future looks brighter. … View our latest analysis for Mastercard Analysts' expectations for the upcoming year seems optimistic, with earnings growing by a significant 60.62%. … NYSE:MA Future Profit Mar 9th 18 Although it is useful to be aware of the rate of growth year by year relative to today’s level, it may be more insightful estimating the rate at which the earnings are growing on average every year.Simply Wall St - – Full article
Mastercard Incorporated (NYSE:MA) trades with a trailing P/E of 47.9x, which is higher than the industry average of 24.8x. … Formula Price-Earnings Ratio = Price per share ÷ Earnings per share P/E Calculation for MA Price per share = $175.93 Earnings per share = $3.669 ∴ Price-Earnings Ratio = $175.93 ÷ $3.669 = 47.9x The P/E ratio isn’t a metric you view in isolation and only becomes useful when you compare it against other similar companies. … Since MA's P/E of 47.9x is higher than its industry peers (24.8x), it means that investors are paying more than they should for each dollar of MA's earnings.Simply Wall St - – Full article
Based on Mastercard Incorporated's (NYSE:MA) earnings update in December 2017, analyst consensus outlook appear vastly optimistic, with profits predicted to ramp up by an impressive 60.67% next year, relative to the past 5-year average growth rate of 11.69%. … To get an idea of the overall earnings growth trend for MA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line. … NYSE:MA Future Profit Feb 13th 18 From the current net income level of $3,915.0M and the final forecast of $7,924.9M by 2021, the annual rate of growth for MA’s earnings is 24.42%.Simply Wall St - – Full article
Check out our latest analysis for Mastercard What you must know about ROE Return on Equity (ROE) is a measure of Mastercard’s profit relative to its shareholders’ equity. … ROE can be dissected into three distinct ratios: net profit margin, asset turnover, and financial leverage. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NYSE:MA Last Perf Feb 1st 18 The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses.Simply Wall St - – Full article
This means that the opportunity to buy Mastercard at a good price has disappeared! … Mastercard’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. … If you believe Mastercard should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable.Simply Wall St - – Full article
Margin Calculation for MA Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 4.62 Billion ÷ 11.94 Billion = 38.70% Mastercard's margin has expanded in the past five years, as a result of a 12.42% average growth in net income surpassing 9.79% in average revenue growth, indicating that that the previous revenue growth has been acompanied by a growing portion translated in to earnings. … Based on future expectations, MA's profit margin will continue to expand, with 11.24% in expected annual revenue growth and a forecasted 14.48% in annual net income growth. … This suggests future earnings growth is driven further by enhanced cost efficiency alongside revenue increases, which is enlarging the incremental amount of net income that is retained from the forecasted revenue growth.Simply Wall St - – Full article
The sum of these cash flows is then discounted to today's value. … 5-year cash flow forecast 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $5,611.95 $6,423.57 $7,083.00 $7,925.00 $8,860.00 Source Analyst x13 Analyst x7 Analyst x1 Analyst x1 Analyst x1 Present Value Discounted @ 9.1% $5,144.04 $5,397.06 $5,454.92 $5,594.50 $5,733.05 Present Value of 5-year Cash Flow (PVCF)= $27,324 We now need to calculate the Terminal Value, which accounts for all the future cash flows after the five years. … NYSE:MA Intrinsic Value Jan 4th 18 The assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows.Simply Wall St - – Full article
See our latest analysis for Mastercard Is MA’s level of debt at an acceptable level? … NYSE:MA Historical Debt Jan 2nd 18 A simple way to determine whether the company has put debt into good use is to look at its operating cash flow against its debt obligation. … MA’s high cash coverage means that, although its debt levels are high, investors shouldn’t panic since the company is able to utilise its borrowings efficiently in order to generate cash flow.Simply Wall St - – Full article
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 related products and services. The company also offers value-added services, such as safety and security products, loyalty and reward programs, information and consulting services, issuer and acquirer processing solutions, and payment and mobile gateways. In addition, it provides various integrated products and services for account holders, merchants, financial institutions, businesses, governments, and other organizations; programs that enable issuers to provide consumers with cards to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid payment programs and management services; and commercial payment products and solutions. Further, the company provides products and services to prevent, detect, and respond to fraud and cyber-attacks, and ensure the safety of transactions. It offers payment solutions and services under the MasterCard, Maestro, and Cirrus brands. Mastercard Incorporated has a strategic partnership with Bahrain Commercial Facilities Company BSC. The company was founded in 1966 and is headquartered in Purchase, New York.
2000 Purchase Street,
New York, 10577,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NYSE||MA||Class A Common Stock||New York Stock Exchange||US||USD||25. May 2006|
|DB||M4I||Class A Common Stock||Deutsche Boerse AG||DE||EUR||25. May 2006|
|XTRA||M4I||Class A Common Stock||XETRA Trading Platform||DE||EUR||25. May 2006|
|LSE||0R2Z||Class A Common Stock||London Stock Exchange||GB||USD||25. May 2006|
|SWX||MA||Class A Common Stock||SIX Swiss Exchange||CH||CHF||25. May 2006|
|WBAG||MAST||Class A Common Stock||Wiener Boerse AG||AT||EUR||25. May 2006|
|BMV||MA *||Class A Common Stock||Bolsa Mexicana de Valores||MX||MXN||25. May 2006|
|BOVESPA||MSCD34||BDR EACH REPR 1 COM CL 'A' USD0.0001||Bolsa de Valores de Sao Paulo||BR||BRL||02. Feb 2012|
|Data Processing and Outsourced Services|
|Area||Date (UTC time)|
|Company Analysis updated:||2018/05/27 10:01|
|End of day share price update:||2018/05/25 00:00|
|Last estimates confirmation:||2018/05/18|
|Last earnings update:||2018/03/31|
|Last annual earnings update:||2017/12/31|
All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.
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.