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Mastercard's (MA) Q4 Earnings Beat on Resilient Spending
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Mastercard Incorporated (MA - Free Report) reported fourth-quarter 2022 adjusted earnings of $2.65 per share, which outpaced the Zacks Consensus Estimate and our estimate of $2.56. The bottom line advanced 13% year over year.
The leading technology company in the global payments industry, Mastercard’s revenues amounted to $5,817 million, which rose 12% year over year in the quarter under review. The top line beat the consensus mark of $5,766 million and our estimate of $5,792.6 million.
Resilient consumer spending, recovery in cross-border travel, cross-border volume growth, higher gross dollar volume ("GDV") and increased switched transactions contributed to the strong quarterly results of Mastercard. Its exposure to Asian economies played a positive role in boosting performance. However, the upside was partly offset by rising operating expenses.
Mastercard Incorporated Price, Consensus and EPS Surprise
In the quarter under review, GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) improved 8% year over year on a local-currency basis to $2,133 billion. This was lower than our estimate of $2,189 billion.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) improved 31% year over year on a local-currency basis. Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, came in at 34 billion. The metric rose 8% year over year.
Other revenues advanced 11% year over year to $2,045 million, including a 1% increase from acquisitions. Remaining growth resulted from Cyber & Intelligence and Data & Services solutions. It beat our estimate of $1,910.1 million.
Rebates and incentives climbed 14% year over year in the quarter under review while our estimate for the same suggested 13.1% growth.
MA’s clients issued 3.1 billion Mastercard and Maestro-branded cards as of Dec 31, 2022.
Operating expenses escalated 10% year over year to $2,633 million, primarily due to higher general and administrative expenses. The metric was lower than our estimate of $2,657.9 million.
Operating income of $3,184 million grew from $2,827 million a year-ago and beat our estimate of $3,134.6 million. Operating margin improved 50 basis points year over year to 54.7% and marginally beat our estimate of 54.1%.
Balance Sheet (as of Dec 31, 2022)
Mastercard exited the fourth quarter with cash and cash equivalents of $7,008 million, down from the 2021-end level of $7,421 million. The figure is way higher than the current portion of long-term debt ($274 million).
Total assets of $38.7 billion increased from the $37.7 billion figure at 2021 end.
Long-term debt amounted to $13.7 billion, which increased from the $13.1 billion figure as of Dec 31, 2021.
Total equity of $6.4 billion dropped from the 2021-end level of $7.4 billion.
Cash Flows
In 2022, net cash provided by operating activities climbed 18.3% from the prior-year comparable period’s level to $11.2 billion.
Share Repurchase and Dividend Payout
Mastercard bought back 7.4 million shares for $2.4 billion in the fourth quarter. It had $11.6 billion left under its authorized share buyback program as of Jan 23, 2022.
Moreover, MA paid out dividends worth $473 million in the quarter under review.
1Q23 Outlook
For the first quarter of 2023, management anticipates net revenues to register the high-end of high-single digit growth from the year-ago quarter’s reported figure. Operating expenses are expected to witness mid-single-digit growth year over year.
2023 Outlook
Management projected net revenues to witness low-teens growth from the 2022 figure of $22,237 million. Operating expenses were estimated to see mid-single-digit growth from the 2022 figure of $9,973 million.
Adjusted earnings of $10.65 per share increased 27% year over year in 2022. The Zacks Consensus Estimate for the metric for 2023 is currently pegged at $12.04 per share.
Based in Austin, TX, Green Dot is a pro-consumer bank holding company and personal banking provider. The Zacks Consensus Estimate for GDOT’s 2022 earnings indicates an 11.3% year-over-year jump.
Headquartered in Fort Worth, TX, FirstCash is a retail pawn stores operator. The Zacks Consensus Estimate for FCFS’ 2022 earnings indicates 29.7% year-over-year growth.
San Juan, Puerto Rico-based EVERTEC has a major transaction processing business. The Zacks Consensus Estimate for EVTC’s 2022 bottom line is pegged at $2.41 per share, which remained stable over the past 30 days.
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Mastercard's (MA) Q4 Earnings Beat on Resilient Spending
Mastercard Incorporated (MA - Free Report) reported fourth-quarter 2022 adjusted earnings of $2.65 per share, which outpaced the Zacks Consensus Estimate and our estimate of $2.56. The bottom line advanced 13% year over year.
The leading technology company in the global payments industry, Mastercard’s revenues amounted to $5,817 million, which rose 12% year over year in the quarter under review. The top line beat the consensus mark of $5,766 million and our estimate of $5,792.6 million.
Resilient consumer spending, recovery in cross-border travel, cross-border volume growth, higher gross dollar volume ("GDV") and increased switched transactions contributed to the strong quarterly results of Mastercard. Its exposure to Asian economies played a positive role in boosting performance. However, the upside was partly offset by rising operating expenses.
Mastercard Incorporated Price, Consensus and EPS Surprise
Mastercard Incorporated price-consensus-eps-surprise-chart | Mastercard Incorporated Quote
Q4 Operational Performance
In the quarter under review, GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) improved 8% year over year on a local-currency basis to $2,133 billion. This was lower than our estimate of $2,189 billion.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) improved 31% year over year on a local-currency basis. Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, came in at 34 billion. The metric rose 8% year over year.
Other revenues advanced 11% year over year to $2,045 million, including a 1% increase from acquisitions. Remaining growth resulted from Cyber & Intelligence and Data & Services solutions. It beat our estimate of $1,910.1 million.
Rebates and incentives climbed 14% year over year in the quarter under review while our estimate for the same suggested 13.1% growth.
MA’s clients issued 3.1 billion Mastercard and Maestro-branded cards as of Dec 31, 2022.
Operating expenses escalated 10% year over year to $2,633 million, primarily due to higher general and administrative expenses. The metric was lower than our estimate of $2,657.9 million.
Operating income of $3,184 million grew from $2,827 million a year-ago and beat our estimate of $3,134.6 million. Operating margin improved 50 basis points year over year to 54.7% and marginally beat our estimate of 54.1%.
Balance Sheet (as of Dec 31, 2022)
Mastercard exited the fourth quarter with cash and cash equivalents of $7,008 million, down from the 2021-end level of $7,421 million. The figure is way higher than the current portion of long-term debt ($274 million).
Total assets of $38.7 billion increased from the $37.7 billion figure at 2021 end.
Long-term debt amounted to $13.7 billion, which increased from the $13.1 billion figure as of Dec 31, 2021.
Total equity of $6.4 billion dropped from the 2021-end level of $7.4 billion.
Cash Flows
In 2022, net cash provided by operating activities climbed 18.3% from the prior-year comparable period’s level to $11.2 billion.
Share Repurchase and Dividend Payout
Mastercard bought back 7.4 million shares for $2.4 billion in the fourth quarter. It had $11.6 billion left under its authorized share buyback program as of Jan 23, 2022.
Moreover, MA paid out dividends worth $473 million in the quarter under review.
1Q23 Outlook
For the first quarter of 2023, management anticipates net revenues to register the high-end of high-single digit growth from the year-ago quarter’s reported figure. Operating expenses are expected to witness mid-single-digit growth year over year.
2023 Outlook
Management projected net revenues to witness low-teens growth from the 2022 figure of $22,237 million. Operating expenses were estimated to see mid-single-digit growth from the 2022 figure of $9,973 million.
Adjusted earnings of $10.65 per share increased 27% year over year in 2022. The Zacks Consensus Estimate for the metric for 2023 is currently pegged at $12.04 per share.
Zacks Rank & Key Picks
Mastercard currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services space are Green Dot Corporation (GDOT - Free Report) , FirstCash Holdings, Inc (FCFS - Free Report) and EVERTEC, Inc. (EVTC - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Based in Austin, TX, Green Dot is a pro-consumer bank holding company and personal banking provider. The Zacks Consensus Estimate for GDOT’s 2022 earnings indicates an 11.3% year-over-year jump.
Headquartered in Fort Worth, TX, FirstCash is a retail pawn stores operator. The Zacks Consensus Estimate for FCFS’ 2022 earnings indicates 29.7% year-over-year growth.
San Juan, Puerto Rico-based EVERTEC has a major transaction processing business. The Zacks Consensus Estimate for EVTC’s 2022 bottom line is pegged at $2.41 per share, which remained stable over the past 30 days.