Back to top

Bear of the Day

Mastercard (MA - Analyst Report) recently beat the Zacks Consensus Estimate by $0.11 for a 16% positive earnings surprise. Problem is, estimates has move lower and that has pushed the stock down to a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.

Earnings Beat

On January 29, the company reported earnings of $0.79 per share, with the Zacks Consensus Estimate calling for $0.68. That $0.11 beat translates into a 16% positive earnings surprise. Despite the beat, estimates have moved lower - and future earnings estimates are the foundation of the Zacks Rank.

Description

Mastercard advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions and provides industry-leading analysis and consulting services to financial institution customers and merchants. Its family of brands include MasterCard, Maestro and Cirrus.

Earnings History

MA has a very strong earnings history, with the last two years seeing 6 beats, one meet and one miss. That is pretty good, so the issue must be the outlook. Lower earnings estimates are a key factor in why the stock is a Zacks Rank #5 (Strong Sell)

Earnings Estimates

The Zacks Consensus Estimate for 2016 has been falling for the last several months. It was as high as $4.04 and has since moved to $3.70.

The Zacks Consensus Estimate for 2017 also recently moved a lot lower. The number was $4.54 in December, but is now down to $4.29.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #5 (Strong Sell) we see that estimates are moving higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.