We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mastercard (MA) Rises 11.8% in 3 Months: More Room to Run?
Read MoreHide Full Article
Shares of Mastercard Incorporated (MA - Free Report) have jumped 11.8% in the past three months, outperforming the industry’s 8.2% increase. Based in Purchase, NY, Mastercard is a global payment solution giant. Resilient consumer spending and solid cross-border volumes are aiding the company. MAhas a market cap of $443.9 billion.
In the past three months, the company’s shares also outperformed the 7.9% and 7% growth in the Business Services sector and the S&P 500 Index, respectively. An expanding payment network, a strong focus on growth areas and value-added services and solutions are supporting its performance. It gains from an active inorganic growth strategy, prudent alliances and technology upgrades, along with product diversification. These factors are collectively contributing to this Zacks Rank #3 (Hold) company's notable price appreciation.
Image Source: Zacks Investment Research
Can MA Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for Mastercard’s 2024 full-year earnings is pegged at $14.37 per share, which indicates 17.2% year-over-year growth. It has witnessed 13 upward estimate revisions during the past two months against one movement in the opposite direction. The company beat earnings estimates in each of the last four quarters, with an average surprise of 3.5%.
The consensus mark for full-year 2024 revenues stands at nearly $28.1 billion, which suggests a 12.1% rise from the prior-year reported number. Our model indicates significant increases in Cross-Border assessments and Transaction Processing assessments in the coming days, which are likely to support top-line growth.
Our model suggests that Cross-Border assessments and Transaction Processing assessments are expected to grow around 20% and 8% year over year, respectively, in 2024. With the growing cross-border business in the post-pandemic era, MA continues to gain from its high-margin nature. Several studies made within the last few quarters revealed that travel and entertainment related growth will continue, a major driver in the cross-border business.
Mastercard's strategic acquisitions, such as CipherTrace, Aiia, Vyze, Nets, RiskRecon, Dynamic Yield and Finicity, bolster its operational capabilities, while partnerships drive traffic to its network. Its collaboration with SoftBank Corp. to introduce Test & Learn, a cloud-based predictive analytics platform in Japan, aims to transform decision-making processes for businesses in the region.
Nexi, a prominent PayTech player in Europe, has strategically aligned with Mastercard to enhance open banking account-based payments throughout the continent. This collaboration leverages Mastercard's Open Banking technology to enable e-commerce transactions across Nexi's expansive network. Additionally, Mastercard has partnered with Egypt’s ALEXBANK, a subsidiary of a leading European banking group, to utilize its diverse range of programs and services, aiming to expand the bank's exclusive credit card base and acquire business.
Thanks to its growing operations, the company consistently generates substantial cash from operations, enabling it to pursue strategic investments and return capital to shareholders. In 2023, operating cash flow amounted to $12 billion, marking a notable 7% increase from 2022. In 2023, MA deployed its capital through $9 billion of share buybacks and $2.2 billion of dividends. The share repurchase program had a leftover capacity of around $13.6 billion as of Jan 26, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Increasing operating costs and a stretched valuation pose challenges for the company. We expect adjusted operating expenses to surge by more than 11% year over year in the current year, which may exert pressure on its bottom line. Additionally, the stock is currently trading at 32.05X forward 12-month earnings, significantly higher than 24X for the industry average. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
The Zacks Consensus Estimate for Fidelity National’s current-year bottom line indicates 37.4% year-over-year growth. FIS beat earnings estimates in two of the past four quarters and missed twice. The consensus estimate for the current-year top line is pegged at $10.1 billion.
The Zacks Consensus Estimate for Flywire’s current year earnings is pegged at 4 cents per share, which indicates a 157.1% year-over-year improvement. FLYW beat earnings estimates in two of the past four quarters, met once and missed on the other occasion, with an average surprise of 33.1%. The consensus estimate for current-year revenues suggests 30.8% year-over-year growth.
The Zacks Consensus Estimate for Cantaloupe’s current-year earnings is pegged at 17 cents per share, which indicates significant growth from breakeven earnings in the year-ago period. CTLP beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 61.7%. The consensus mark for current-year revenues predicts a 13.2% year-over-year gain.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Mastercard (MA) Rises 11.8% in 3 Months: More Room to Run?
Shares of Mastercard Incorporated (MA - Free Report) have jumped 11.8% in the past three months, outperforming the industry’s 8.2% increase. Based in Purchase, NY, Mastercard is a global payment solution giant. Resilient consumer spending and solid cross-border volumes are aiding the company. MAhas a market cap of $443.9 billion.
In the past three months, the company’s shares also outperformed the 7.9% and 7% growth in the Business Services sector and the S&P 500 Index, respectively. An expanding payment network, a strong focus on growth areas and value-added services and solutions are supporting its performance. It gains from an active inorganic growth strategy, prudent alliances and technology upgrades, along with product diversification. These factors are collectively contributing to this Zacks Rank #3 (Hold) company's notable price appreciation.
Image Source: Zacks Investment Research
Can MA Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for Mastercard’s 2024 full-year earnings is pegged at $14.37 per share, which indicates 17.2% year-over-year growth. It has witnessed 13 upward estimate revisions during the past two months against one movement in the opposite direction. The company beat earnings estimates in each of the last four quarters, with an average surprise of 3.5%.
The consensus mark for full-year 2024 revenues stands at nearly $28.1 billion, which suggests a 12.1% rise from the prior-year reported number. Our model indicates significant increases in Cross-Border assessments and Transaction Processing assessments in the coming days, which are likely to support top-line growth.
Our model suggests that Cross-Border assessments and Transaction Processing assessments are expected to grow around 20% and 8% year over year, respectively, in 2024. With the growing cross-border business in the post-pandemic era, MA continues to gain from its high-margin nature. Several studies made within the last few quarters revealed that travel and entertainment related growth will continue, a major driver in the cross-border business.
Mastercard's strategic acquisitions, such as CipherTrace, Aiia, Vyze, Nets, RiskRecon, Dynamic Yield and Finicity, bolster its operational capabilities, while partnerships drive traffic to its network. Its collaboration with SoftBank Corp. to introduce Test & Learn, a cloud-based predictive analytics platform in Japan, aims to transform decision-making processes for businesses in the region.
Nexi, a prominent PayTech player in Europe, has strategically aligned with Mastercard to enhance open banking account-based payments throughout the continent. This collaboration leverages Mastercard's Open Banking technology to enable e-commerce transactions across Nexi's expansive network. Additionally, Mastercard has partnered with Egypt’s ALEXBANK, a subsidiary of a leading European banking group, to utilize its diverse range of programs and services, aiming to expand the bank's exclusive credit card base and acquire business.
Thanks to its growing operations, the company consistently generates substantial cash from operations, enabling it to pursue strategic investments and return capital to shareholders. In 2023, operating cash flow amounted to $12 billion, marking a notable 7% increase from 2022. In 2023, MA deployed its capital through $9 billion of share buybacks and $2.2 billion of dividends. The share repurchase program had a leftover capacity of around $13.6 billion as of Jan 26, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Increasing operating costs and a stretched valuation pose challenges for the company. We expect adjusted operating expenses to surge by more than 11% year over year in the current year, which may exert pressure on its bottom line. Additionally, the stock is currently trading at 32.05X forward 12-month earnings, significantly higher than 24X for the industry average. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Key Picks
Some better-ranked stocks in the broader Business Services space are Fidelity National Information Services, Inc. (FIS - Free Report) , Flywire Corporation (FLYW - Free Report) and Cantaloupe, Inc. (CTLP - 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.
The Zacks Consensus Estimate for Fidelity National’s current-year bottom line indicates 37.4% year-over-year growth. FIS beat earnings estimates in two of the past four quarters and missed twice. The consensus estimate for the current-year top line is pegged at $10.1 billion.
The Zacks Consensus Estimate for Flywire’s current year earnings is pegged at 4 cents per share, which indicates a 157.1% year-over-year improvement. FLYW beat earnings estimates in two of the past four quarters, met once and missed on the other occasion, with an average surprise of 33.1%. The consensus estimate for current-year revenues suggests 30.8% year-over-year growth.
The Zacks Consensus Estimate for Cantaloupe’s current-year earnings is pegged at 17 cents per share, which indicates significant growth from breakeven earnings in the year-ago period. CTLP beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 61.7%. The consensus mark for current-year revenues predicts a 13.2% year-over-year gain.