What Is Mastercard Incorporated's (NYSE:MA) Share Price Doing?

By
Simply Wall St
Published
November 16, 2021
NYSE:MA
Source: Shutterstock

Today we're going to take a look at the well-established Mastercard Incorporated (NYSE:MA). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Mastercard’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Mastercard

Is Mastercard still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.0% below my intrinsic value, which means if you buy Mastercard today, you’d be paying a fair price for it. And if you believe that the stock is really worth $381.09, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Mastercard’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Mastercard?

earnings-and-revenue-growth
NYSE:MA Earnings and Revenue Growth November 17th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Mastercard's earnings over the next few years are expected to increase by 68%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? MA’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on MA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Mastercard and we think they deserve your attention.

If you are no longer interested in Mastercard, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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