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Mastercard (MA) Gears Up for Q1 Earnings: What's in the Cards?
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Mastercard Incorporated (MA - Free Report) is set to report its first-quarter 2023 results on Apr 27, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for first-quarter 2023 earnings per share of $2.71 has witnessed four upward revisions and no downward movement in the past month. The estimate, however, is indicative of a 1.8% decrease from the year-ago reported figure. Our estimate of $2.69 per share earnings indicates a 2.7% year-over-year decline.
Both the Zacks Consensus Estimate and our estimate for revenues are pegged at $5.6 billion, suggesting an 8.8% jump from the year-ago level.
Mastercard beat earnings estimates in all the trailing four quarters, delivering an average of 10.9%. This is depicted in the graph below.
Before we get into what to expect in the to-be-reported quarter in detail, it’s worth taking a look at MA’s previous-quarter performance first.
Q4 Earnings Rewind
In the last reported quarter, this leading global payment solutions company’s adjusted earnings per share of $2.65 beat the Zacks Consensus Estimate by 3.5%, primarily on resilient consumer spending, cross-border volume growth, higher gross dollar volume ("GDV") and increased switched transactions. Its exposure to Asian economies played a positive role in boosting performance. However, the upside was partly offset by rising operating expenses.
Mastercard’s first-quarter revenues are likely to have benefited from increased travel and entertainment-related spending. 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 increased usage of its cards, both in the domestic and international markets, in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s total GDV for all MA-branded programs is pegged at $2,049 billion, suggesting a 6.9% rise from the prior-year quarter’s reported figure. Our estimate for the metric is pegged at $2,065.7 billion, indicating a 7.8% increase.
In the first quarter, processed transactions are likely to have witnessed a jump due to improved consumer spending and increased contactless acceptance initiatives pursued by the technology company. The consensus mark for the same indicates an 8.2% increase from the year-ago period’s reading.
Increased cross-border travel is expected to have favored cross-border volumes of Mastercard. The Zacks Consensus Estimate for cross-border volume fees is pegged at $1,745.9 million, indicating a rise from $1,395 million a year ago.
All the abovementioned factors are likely to have boosted Mastercard’s top line in the first quarter, leading to significant growth from the year-ago level. Yet, the company is expected to have incurred escalated costs and higher rebates and incentives in the March quarter. This is anticipated to have resulted in a decline in profits, making an earnings beat uncertain.
Mastercard’s operating costs are likely to have significantly increased in the first quarter due to higher advertising, marketing, G&A and data processing costs, thereby hurting the bottom line. We expect total adjusted operating expenses for the first quarter to have increased 8.6% 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 -0.89%. This is because the Most Accurate Estimate is currently pegged at $2.69 per share, lower than the Zacks Consensus Estimate of $2.71.
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 Palantir Technologies’ bottom line for the to-be-reported quarter indicates 100% year-over-year growth. The consensus mark has remained stable over the past week. Furthermore, the consensus mark for PLTR’s revenues indicates a 13.1% increase from a year ago.
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +21.25% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which suggests a 166.7% year-over-year jump. FOUR beat earnings estimates in all the past four quarters, with an average surprise of 21.5%.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +1.20% and a Zacks Rank of 3.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $2.92 per share, indicating 1% year-over-year growth. SPGI beat earnings estimates in two of the past four quarters and missed twice, with the average surprise being 0.2%.
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Mastercard (MA) Gears Up for Q1 Earnings: What's in the Cards?
Mastercard Incorporated (MA - Free Report) is set to report its first-quarter 2023 results on Apr 27, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for first-quarter 2023 earnings per share of $2.71 has witnessed four upward revisions and no downward movement in the past month. The estimate, however, is indicative of a 1.8% decrease from the year-ago reported figure. Our estimate of $2.69 per share earnings indicates a 2.7% year-over-year decline.
Both the Zacks Consensus Estimate and our estimate for revenues are pegged at $5.6 billion, suggesting an 8.8% jump from the year-ago level.
Mastercard beat earnings estimates in all the trailing four quarters, delivering an average of 10.9%. This is depicted in the graph below.
Mastercard Incorporated Price and EPS Surprise
Mastercard Incorporated price-eps-surprise | Mastercard Incorporated Quote
Before we get into what to expect in the to-be-reported quarter in detail, it’s worth taking a look at MA’s previous-quarter performance first.
Q4 Earnings Rewind
In the last reported quarter, this leading global payment solutions company’s adjusted earnings per share of $2.65 beat the Zacks Consensus Estimate by 3.5%, primarily on resilient consumer spending, cross-border volume growth, higher gross dollar volume ("GDV") and increased switched transactions. Its exposure to Asian economies played a positive role in boosting performance. However, the upside was partly offset by rising operating expenses.
Now let’s see how things have shaped up before the first-quarter 2023 earnings announcement.
Q1 Factors to Note
Mastercard’s first-quarter revenues are likely to have benefited from increased travel and entertainment-related spending. 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 increased usage of its cards, both in the domestic and international markets, in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s total GDV for all MA-branded programs is pegged at $2,049 billion, suggesting a 6.9% rise from the prior-year quarter’s reported figure. Our estimate for the metric is pegged at $2,065.7 billion, indicating a 7.8% increase.
In the first quarter, processed transactions are likely to have witnessed a jump due to improved consumer spending and increased contactless acceptance initiatives pursued by the technology company. The consensus mark for the same indicates an 8.2% increase from the year-ago period’s reading.
Increased cross-border travel is expected to have favored cross-border volumes of Mastercard. The Zacks Consensus Estimate for cross-border volume fees is pegged at $1,745.9 million, indicating a rise from $1,395 million a year ago.
All the abovementioned factors are likely to have boosted Mastercard’s top line in the first quarter, leading to significant growth from the year-ago level. Yet, the company is expected to have incurred escalated costs and higher rebates and incentives in the March quarter. This is anticipated to have resulted in a decline in profits, making an earnings beat uncertain.
Mastercard’s operating costs are likely to have significantly increased in the first quarter due to higher advertising, marketing, G&A and data processing costs, thereby hurting the bottom line. We expect total adjusted operating expenses for the first quarter to have increased 8.6% 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 -0.89%. This is because the Most Accurate Estimate is currently pegged at $2.69 per share, lower than the Zacks Consensus Estimate of $2.71.
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:
Palantir Technologies Inc. (PLTR - Free Report) has an Earnings ESP of +7.69% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palantir Technologies’ bottom line for the to-be-reported quarter indicates 100% year-over-year growth. The consensus mark has remained stable over the past week. Furthermore, the consensus mark for PLTR’s revenues indicates a 13.1% increase from a year ago.
Shift4 Payments, Inc. (FOUR - Free Report) has an Earnings ESP of +21.25% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Shift4 Payments’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which suggests a 166.7% year-over-year jump. FOUR beat earnings estimates in all the past four quarters, with an average surprise of 21.5%.
S&P Global Inc. (SPGI - Free Report) has an Earnings ESP of +1.20% and a Zacks Rank of 3.
The Zacks Consensus Estimate for S&P Global’s bottom line for the to-be-reported quarter is pegged at $2.92 per share, indicating 1% year-over-year growth. SPGI beat earnings estimates in two of the past four quarters and missed twice, with the average surprise being 0.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.