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Mastercard (MA) Gears Up for Q3 Earnings: What Lies Ahead?
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Mastercard Incorporated (MA - Free Report) is set to report third-quarter 2022 results on Oct 27, before the opening bell.
In the last reported quarter, the leading global payment solutions company’s adjusted earnings per share of $2.56 beat the Zacks Consensus Estimate by 8.5%, primarily on improved consumer spending, solid cross-border volume growth, higher gross dollar volume (GDV) and increased switched transactions. However, the upside was partly offset by elevated operating expenses.
The Zacks Consensus Estimate for third-quarter 2022 earnings per share of $2.57 has witnessed one upside revision and one downward movement in the past week. The estimate is indicative of an 8.4% increase from the year-ago reported figure. Our estimate of $2.61 per share earnings indicates a 10.2% year-over-year increase.
Similarly, the Zacks Consensus Estimate and our estimate for revenues are pegged at $5.7 billion, suggesting a 13.4% jump from the year-ago level.
Mastercard beat earnings estimates in each of the trailing four quarters, delivering an average of 12.9%. This is depicted in the graph below.
Mastercard’s third-quarter revenues are likely to have benefited from increased travel and entertainment related spendings. MA’s GDV (the dollar volume of activity on Mastercard-branded cards during a particular period, on a local currency basis and U.S. dollar-converted basis) is likely to have benefited from an increased usage of its debit and credit cards, both within and outside the United States, in the to-be-reported quarter.
The Zacks Consensus Estimate for Mastercard’s total GDV for all MA-branded programs is pegged at $2,107 million, suggesting an 8.7% rise from the prior-year quarter’s reported figure. Our estimate for the metric is pegged at $2,148.5 million.
Processed transactions are likely to have witnessed an uptick in the third quarter owing to improved consumer spending and increased contactless acceptance initiatives pursued by the technology company. The consensus mark for the same indicates a 10.5% increase from the year-ago period’s reading.
Increased cross-border travel might have favored cross-border volumes of Mastercard. The Zacks Consensus Estimate for cross-border volume fees is pegged at $1,619 million, hinting at a rise from $1,276 million a year ago.
All the above-mentioned factors might boost Mastercard’s results for the third quarter, leading to significant growth from the prior-year quarter’s performance. Yet, the company is expected to have incurred escalated costs under rebates and incentives in the September quarter. This might have affected its margins.
Moreover, Mastercard’s operating costs are likely to have significantly increased in the third quarter due to higher advertising, marketing and data processing costs, thereby hurting the bottom line and making an earnings beat uncertain. We expect total operating expense for the third quarter to have increased 13.2% from the prior-year quarter’s actuals.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Mastercard this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: Mastercard has an Earnings ESP of -0.28%. This is because the Most Accurate Estimate is currently pegged lower than the Zacks Consensus Estimate for earnings of $2.57 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Mastercard currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Mastercard, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter indicates a 53.9% increase from the year-ago quarter’s reported figure. FOUR’s earnings beat estimates in two of the last four quarters, met the mark once and missed the same on another occasion, the average surprise being 4.2%.
Marqeta, Inc. (MQ - Free Report) has an Earnings ESP of +10.00% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Marqeta’s bottom line for the to-be-reported quarter remained stable in the past week. MQ beat on earnings in three of the last four quarters and missed the mark once, the average beat being 21.8%.
Riot Blockchain, Inc. (RIOT - Free Report) has an Earnings ESP of +125.49% and a Zacks Rank #3.
The Zacks Consensus Estimate for Riot Blockchain’s bottom line for the to-be-reported quarter is pegged at 3 cents per share, which has been revised upward twice in the past 30 days against once in the opposite direction. The consensus mark for RIOT’s top line is pegged at $58.4 million.
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Mastercard (MA) Gears Up for Q3 Earnings: What Lies Ahead?
Mastercard Incorporated (MA - Free Report) is set to report third-quarter 2022 results on Oct 27, before the opening bell.
In the last reported quarter, the leading global payment solutions company’s adjusted earnings per share of $2.56 beat the Zacks Consensus Estimate by 8.5%, primarily on improved consumer spending, solid cross-border volume growth, higher gross dollar volume (GDV) and increased switched transactions. However, the upside was partly offset by elevated operating expenses.
Let’s see how things have shaped up prior to the third-quarter 2022 earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter 2022 earnings per share of $2.57 has witnessed one upside revision and one downward movement in the past week. The estimate is indicative of an 8.4% increase from the year-ago reported figure. Our estimate of $2.61 per share earnings indicates a 10.2% year-over-year increase.
Similarly, the Zacks Consensus Estimate and our estimate for revenues are pegged at $5.7 billion, suggesting a 13.4% jump from the year-ago level.
Mastercard beat earnings estimates in each of the trailing four quarters, delivering an average of 12.9%. This is depicted in the graph below.
Mastercard Incorporated Price and EPS Surprise
Mastercard Incorporated price-eps-surprise | Mastercard Incorporated Quote
Factors to Note
Mastercard’s third-quarter revenues are likely to have benefited from increased travel and entertainment related spendings. MA’s GDV (the dollar volume of activity on Mastercard-branded cards during a particular period, on a local currency basis and U.S. dollar-converted basis) is likely to have benefited from an increased usage of its debit and credit cards, both within and outside the United States, in the to-be-reported quarter.
The Zacks Consensus Estimate for Mastercard’s total GDV for all MA-branded programs is pegged at $2,107 million, suggesting an 8.7% rise from the prior-year quarter’s reported figure. Our estimate for the metric is pegged at $2,148.5 million.
Processed transactions are likely to have witnessed an uptick in the third quarter owing to improved consumer spending and increased contactless acceptance initiatives pursued by the technology company. The consensus mark for the same indicates a 10.5% increase from the year-ago period’s reading.
Increased cross-border travel might have favored cross-border volumes of Mastercard. The Zacks Consensus Estimate for cross-border volume fees is pegged at $1,619 million, hinting at a rise from $1,276 million a year ago.
All the above-mentioned factors might boost Mastercard’s results for the third quarter, leading to significant growth from the prior-year quarter’s performance. Yet, the company is expected to have incurred escalated costs under rebates and incentives in the September quarter. This might have affected its margins.
Moreover, Mastercard’s operating costs are likely to have significantly increased in the third quarter due to higher advertising, marketing and data processing costs, thereby hurting the bottom line and making an earnings beat uncertain. We expect total operating expense for the third quarter to have increased 13.2% from the prior-year quarter’s actuals.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Mastercard this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: Mastercard has an Earnings ESP of -0.28%. This is because the Most Accurate Estimate is currently pegged lower than the Zacks Consensus Estimate for earnings of $2.57 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Mastercard currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Mastercard, here are some companies from the broader Business Services space that you may want to consider, as our model shows that these have the right combination of elements to beat on earnings this time around:
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter indicates a 53.9% increase from the year-ago quarter’s reported figure. FOUR’s earnings beat estimates in two of the last four quarters, met the mark once and missed the same on another occasion, the average surprise being 4.2%.
Marqeta, Inc. (MQ - Free Report) has an Earnings ESP of +10.00% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Marqeta’s bottom line for the to-be-reported quarter remained stable in the past week. MQ beat on earnings in three of the last four quarters and missed the mark once, the average beat being 21.8%.
Riot Blockchain, Inc. (RIOT - Free Report) has an Earnings ESP of +125.49% and a Zacks Rank #3.
The Zacks Consensus Estimate for Riot Blockchain’s bottom line for the to-be-reported quarter is pegged at 3 cents per share, which has been revised upward twice in the past 30 days against once in the opposite direction. The consensus mark for RIOT’s top line is pegged at $58.4 million.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.