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Can Mastercard (MA) Sustain Its Beat Streak in Q4 Earnings?
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Mastercard Incorporated (MA - Free Report) is scheduled to release fourth-quarter 2022 results on Jan 26, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for Mastercard’s fourth-quarter earnings per share is pegged at $2.56, which indicates an improvement of 8.9% from the prior-year quarter’s reported figure. Our estimate matches the consensus mark.
The consensus mark for revenues stands at $5.8 billion, suggesting 10.4% growth from the year-ago quarter’s reported number, which matches our estimate.
Earnings Surprise History
Mastercard boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
Our proven model predicts 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 odds of an earnings beat, which is precisely the case here.
Earnings ESP: Mastercard has an Earnings ESP of +0.36% because the Most Accurate Estimate of $2.57 is pegged higher than the Zacks Consensus Estimate of $2.56. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Revenues of Mastercard are likely to have gained on the back of growing worldwide gross dollar volume (GDV) and switched transactions coupled with rebounding cross-border volumes in the fourth quarter. Strong consumer spending despite continued inflationary headwinds might have favored MA’s quarterly performance.
Per the last earnings call, net revenue growth on a year-over-year basis is forecasted to lie at the high end of a mid-teens rate, on a currency-neutral basis, excluding acquisitions, in the fourth quarter.
Mastercard’s GDV (which denotes 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 expected to have benefited from increased usage of its debit and credit cards both within and outside the United States in the to-be-reported quarter. Increased confidence of consumers in traveling is expected to have provided an impetus to MA’s GDV.
The Zacks Consensus Estimate for Mastercard’s total GDV for all Mastercard-branded programs is pegged at $2.2 billion, which indicates a 3.3% rise from the prior-year quarter’s reported figure.
Switched transactions (the number of transactions initiated and switched through Mastercard’s network) are likely to have witnessed an uptick in the fourth quarter on the back of increased issuance of Mastercard-branded cards. Pursuing contactless acceptance initiatives by MA might have also favored its quarterly performance. The consensus mark for switched transactions suggests 10.3% growth from the year-ago quarter’s reported figure.
Recovery in cross-border travel spending coupled with relaxation of border restrictions are likely to have driven cross-border volumes of Mastercard.
However, its top-line growth might be partly dampened by increased rebates and incentives resulting from growing volumes and transactions coupled with new and renewed deal activity in the to-be-reported quarter.
Additionally, the operating costs of Mastercard are likely to have escalated in the fourth quarter due to increased expenses incurred in relation to acquisitions and personnel costs. An elevated expense level might have negatively impacted MA’s margins.
On the last earnings call, management anticipates operating expenses to witness low double-digit growth year over year in the fourth quarter, on a currency-neutral basis, excluding acquisitions and special items.
Other Stocks to Consider
Here are some other companies from the Business Services space, which according to our model have the right combination of elements to beat on earnings this time around:
Amadeus IT Group, S.A. (AMADY - Free Report) has an Earnings ESP of +9.76% and a Zacks Rank of 1 at present. The Zacks Consensus Estimate for AMADY’s fourth-quarter 2022 earnings stands at 41 cents per share, indicating a nearly five-fold increase from the prior-year quarter’s reported figure.
The consensus mark for Amadeus’ fourth-quarter earnings has been revised 7.9% north over the past seven days.
Inspired Entertainment, Inc. (INSE - Free Report) currently has an Earnings ESP of +17.72% and a Zacks Rank of 2. The Zacks Consensus Estimate for INSE’s fourth-quarter 2022 earnings is pegged at 26 cents per share. A loss of 5 cents per share was reported in the prior-year quarter.
Inspired Entertainment’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 19.02%.
FLEETCOR Technologies, Inc. has an Earnings ESP of +0.66% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for FLT’s fourth-quarter 2022 earnings stands at $3.90 per share, suggesting an improvement of 4.8% from the prior-year quarter’s reported figure.
FLEETCOR Technologies’ bottom line surpassed estimates in each of the trailing four quarters, the average surprise being 3.78%.
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Can Mastercard (MA) Sustain Its Beat Streak in Q4 Earnings?
Mastercard Incorporated (MA - Free Report) is scheduled to release fourth-quarter 2022 results on Jan 26, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for Mastercard’s fourth-quarter earnings per share is pegged at $2.56, which indicates an improvement of 8.9% from the prior-year quarter’s reported figure. Our estimate matches the consensus mark.
The consensus mark for revenues stands at $5.8 billion, suggesting 10.4% growth from the year-ago quarter’s reported number, which matches our estimate.
Earnings Surprise History
Mastercard boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
Mastercard Incorporated Price and EPS Surprise
Mastercard Incorporated price-eps-surprise | Mastercard Incorporated Quote
What Our Quantitative Model Unveils
Our proven model predicts 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 odds of an earnings beat, which is precisely the case here.
Earnings ESP: Mastercard has an Earnings ESP of +0.36% because the Most Accurate Estimate of $2.57 is pegged higher than the Zacks Consensus Estimate of $2.56. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Zacks Rank: MA currently carries a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here.
Factors to Note
Revenues of Mastercard are likely to have gained on the back of growing worldwide gross dollar volume (GDV) and switched transactions coupled with rebounding cross-border volumes in the fourth quarter. Strong consumer spending despite continued inflationary headwinds might have favored MA’s quarterly performance.
Per the last earnings call, net revenue growth on a year-over-year basis is forecasted to lie at the high end of a mid-teens rate, on a currency-neutral basis, excluding acquisitions, in the fourth quarter.
Mastercard’s GDV (which denotes 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 expected to have benefited from increased usage of its debit and credit cards both within and outside the United States in the to-be-reported quarter. Increased confidence of consumers in traveling is expected to have provided an impetus to MA’s GDV.
The Zacks Consensus Estimate for Mastercard’s total GDV for all Mastercard-branded programs is pegged at $2.2 billion, which indicates a 3.3% rise from the prior-year quarter’s reported figure.
Switched transactions (the number of transactions initiated and switched through Mastercard’s network) are likely to have witnessed an uptick in the fourth quarter on the back of increased issuance of Mastercard-branded cards. Pursuing contactless acceptance initiatives by MA might have also favored its quarterly performance. The consensus mark for switched transactions suggests 10.3% growth from the year-ago quarter’s reported figure.
Recovery in cross-border travel spending coupled with relaxation of border restrictions are likely to have driven cross-border volumes of Mastercard.
However, its top-line growth might be partly dampened by increased rebates and incentives resulting from growing volumes and transactions coupled with new and renewed deal activity in the to-be-reported quarter.
Additionally, the operating costs of Mastercard are likely to have escalated in the fourth quarter due to increased expenses incurred in relation to acquisitions and personnel costs. An elevated expense level might have negatively impacted MA’s margins.
On the last earnings call, management anticipates operating expenses to witness low double-digit growth year over year in the fourth quarter, on a currency-neutral basis, excluding acquisitions and special items.
Other Stocks to Consider
Here are some other companies from the Business Services space, which according to our model have the right combination of elements to beat on earnings this time around:
Amadeus IT Group, S.A. (AMADY - Free Report) has an Earnings ESP of +9.76% and a Zacks Rank of 1 at present. The Zacks Consensus Estimate for AMADY’s fourth-quarter 2022 earnings stands at 41 cents per share, indicating a nearly five-fold increase from the prior-year quarter’s reported figure.
The consensus mark for Amadeus’ fourth-quarter earnings has been revised 7.9% north over the past seven days.
Inspired Entertainment, Inc. (INSE - Free Report) currently has an Earnings ESP of +17.72% and a Zacks Rank of 2. The Zacks Consensus Estimate for INSE’s fourth-quarter 2022 earnings is pegged at 26 cents per share. A loss of 5 cents per share was reported in the prior-year quarter.
Inspired Entertainment’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 19.02%.
FLEETCOR Technologies, Inc. has an Earnings ESP of +0.66% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for FLT’s fourth-quarter 2022 earnings stands at $3.90 per share, suggesting an improvement of 4.8% from the prior-year quarter’s reported figure.
FLEETCOR Technologies’ bottom line surpassed estimates in each of the trailing four quarters, the average surprise being 3.78%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.