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Mastercard's (MA) Q4 Earnings and Revenues Beat, Decline Y/Y
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Mastercard Inc.’s (MA - Free Report) fourth-quarter 2020 earnings of $1.64 per share beat the Zacks Consensus Estimate by 8.6%. However, the bottom line was down 16% year over year due to weak cross-border business. Rebates and incentives were flat but inched up 1% on a currency-neutral basis.
Mastercard’s revenues of $4.1 billion surpassed the Zacks Consensus Estimate by 2.7%. However, the top line fell 7% on a currency-neutral basis. Revenues were affected primarily by a decline in cross-border volumes. Total adjusted operating expenses remained unchanged year over year at $2 billion owing to a dip in advertising and marketing, which was offset by a rise in general and administrative expenses.
Other revenues grew 16% or 17% on a currency-neutral basis. This also includes a 1% increase in acquisitions. Remaining growth was driven, primarily by the company’s Cyber & Intelligence and Data & Services solutions.
Adjusted operating margin of 51% contracted 330 basis points year over year.
Mastercard Incorporated Price, Consensus and EPS Surprise
Gross dollar volume was up 1% to $1.7 trillion while cross-border volumes plunged 29% on a local-currency basis.
Switched transactions, which indicate the number of times a company’s products were used to facilitate transactions, were up 4% year over year.
As of Dec 31, 2020, the company’s customers issued 2.8 billion Mastercard and Maestro-branded cards.
Share Repurchase and Dividend Payout
During the quarter, Mastercard bought back 3.1 million shares at a cost of $1 billion and paid out $399 million in dividends.
Balance Sheet Position (as of Dec 31, 2020)
The company’s long-term debt was $12 billion, up 41% from the level as of Dec 31, 2019 because a $4-billion long-term debt was issued in March. However, cash and cash equivalents of $10.11 billion soared 44.7% from the level as of Dec 31, 2019.
Business Update
In the quarter, the company closed its buyout of Finicity for $825 million. The acquired entity is a leading North American provider of real-time access to financial data and insights. The deal will likely expand the company’s reach in open banking, an area in which it has been too keen to grow for a while now.
2020 Update
The company reported full-year revenues of $15.3 billion, down 8% on a currency neutral basis. EPS of $6.43 per share also dropped 16% on a currency neutral basis.
Our Take
Mastercard is poised for strong growth owing to a rapid shift from cash to the digital modes of payment, which is mostly preferred by the next-gen consumers. Also, the coronavirus episode prompted the older generation to adopt the digital method, given that this is so very flexible, easy and more secure. Thus, the transition to digital seems almost permanent.
Even after the vaccine finds its way into our lives, some of the changes brought in by the pandemic are there to stay and payment via the digital route is one such phenomenon.
In six months’ time, the stock has gained 3% against its industry’s decline of 1.2%. Other stocks in the same space including American Express Co. (AXP - Free Report) and Discover Financial Services (DFS - Free Report) have also gained 20.8% and 63.9%, respectively, while Visa Inc. (V - Free Report) has lost 0.9% during the same time frame.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Mastercard's (MA) Q4 Earnings and Revenues Beat, Decline Y/Y
Mastercard Inc.’s (MA - Free Report) fourth-quarter 2020 earnings of $1.64 per share beat the Zacks Consensus Estimate by 8.6%. However, the bottom line was down 16% year over year due to weak cross-border business.
Rebates and incentives were flat but inched up 1% on a currency-neutral basis.
Mastercard’s revenues of $4.1 billion surpassed the Zacks Consensus Estimate by 2.7%. However, the top line fell 7% on a currency-neutral basis. Revenues were affected primarily by a decline in cross-border volumes.
Total adjusted operating expenses remained unchanged year over year at $2 billion owing to a dip in advertising and marketing, which was offset by a rise in general and administrative expenses.
Other revenues grew 16% or 17% on a currency-neutral basis. This also includes a 1% increase in acquisitions. Remaining growth was driven, primarily by the company’s Cyber & Intelligence and Data & Services solutions.
Adjusted operating margin of 51% contracted 330 basis points year over year.
Mastercard Incorporated Price, Consensus and EPS Surprise
Mastercard Incorporated price-consensus-eps-surprise-chart | Mastercard Incorporated Quote
Gross dollar volume was up 1% to $1.7 trillion while cross-border volumes plunged 29% on a local-currency basis.
Switched transactions, which indicate the number of times a company’s products were used to facilitate transactions, were up 4% year over year.
As of Dec 31, 2020, the company’s customers issued 2.8 billion Mastercard and Maestro-branded cards.
Share Repurchase and Dividend Payout
During the quarter, Mastercard bought back 3.1 million shares at a cost of $1 billion and paid out $399 million in dividends.
Balance Sheet Position (as of Dec 31, 2020)
The company’s long-term debt was $12 billion, up 41% from the level as of Dec 31, 2019 because a $4-billion long-term debt was issued in March. However, cash and cash equivalents of $10.11 billion soared 44.7% from the level as of Dec 31, 2019.
Business Update
In the quarter, the company closed its buyout of Finicity for $825 million. The acquired entity is a leading North American provider of real-time access to financial data and insights. The deal will likely expand the company’s reach in open banking, an area in which it has been too keen to grow for a while now.
2020 Update
The company reported full-year revenues of $15.3 billion, down 8% on a currency neutral basis. EPS of $6.43 per share also dropped 16% on a currency neutral basis.
Our Take
Mastercard is poised for strong growth owing to a rapid shift from cash to the digital modes of payment, which is mostly preferred by the next-gen consumers. Also, the coronavirus episode prompted the older generation to adopt the digital method, given that this is so very flexible, easy and more secure. Thus, the transition to digital seems almost permanent.
Even after the vaccine finds its way into our lives, some of the changes brought in by the pandemic are there to stay and payment via the digital route is one such phenomenon.
In six months’ time, the stock has gained 3% against its industry’s decline of 1.2%. Other stocks in the same space including American Express Co. (AXP - Free Report) and Discover Financial Services (DFS - Free Report) have also gained 20.8% and 63.9%, respectively, while Visa Inc. (V - Free Report) has lost 0.9% during the same time frame.
Zacks Rank
Mastercard carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>