Estimates for Mastercard Incorporated (MA - Free Report) have been revised upward over the past 30 days, reflecting analysts' optimism on the stock. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings move 0.2% and 0.1% north over the same time frame.
Shares of this Zacks Rank #2 (Buy) company have rallied nearly 16.1% in the past year, outperforming the industry’s growth of 3.1%.
Now, let’s focus on some important factors that make the company an investor favorite.
Consistent Top-line Growth: Mastercard has been witnessing a rise in revenues for the past many years, evidenced by its 5-year CAGR (2012-2017) of 11%. The same was up 21% during the first nine months of 2018. We believe, the company should retain its revenue momentum in the coming quarters on the back of a strong market position and an attractive core business that continues to be driven by new deals, renewed agreements and expansion of service offerings. Ongoing initiatives including digital strategy and a consistent widening of geographic footprints raise further hopes.
Robust International Operations: International markets provide both growth and diversification benefits to Mastercard. Global regions like the Asia-Pacific, Canada, Europe, Latin America, Africa and the Middle East contribute a lion’s share to the company’s top line. Strategic tie-ups with the governments, banks and corporations in these regions along with the developed nations of Germany, the U.K., Australia and Japan bode well for extension into the e-commerce zone in the emerging e-money sector. These markets have potential to generate development over the coming years, led by a shift toward card usage and higher consumer spending. Moreover, these markets remain less penetrated than the U.S. markets.
Strategic Initiatives: The company has been constantly making efforts to grow via acquisitions and collaborations. It has recently partnered with Microsoft to boost its digital platform. Moreover, the company has teamed up with Wirecard to broaden the reach of the global issuing business. Earlier this year, Mastercard has acquired the mobile payments technology company Oltio from Standard Bank Group. There are also quite a few plans which are under progress and will be rolled out next year. All these inorganic growth efforts and investments have been adding to the company’s top-line growth and are expected to bear fruits over time.
Strong Balance Sheet: The company boasts a strong balance sheet with financial flexibility and continuous cash flow from operating activities. Its disciplined capital management strategy via share buybacks and dividend payments remains impressive. We believe, the company will consistently generate favorable cash from operations on the back of its growing business volumes. Its strong capital position enables it to make investments that have driven inorganic growth.
Positive Earnings Surprise History: The company boasts an encouraging earnings surprise history with average trailing four-quarter beat of 8.82%. This definitely reflects the company’s operational excellence.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $6.44, representing a year-over-year surge of 40.6% on 19.5% higher revenues of $14.93 billion.
For 2019, the Zacks Consensus Estimate for earnings per share stands at $7.54 on $16.5 billion revenues, translating into a respective 16.9% and 12.8% year-over-year rise.
Further, the company’s long-term (five years) estimated EPS growth rate of 18.1%, greater than the industry’s earnings growth rate of 13.5%, promises rewards for investors.
Other Stocks to Consider
Investors interested in the financial transaction services sector can also look into some other top-ranked stocks like Cardtronics plc (CATM - Free Report) , Evertec, Inc. (EVTC - Free Report) and Green Dot Corporation (GDOT - Free Report) .
Cardtronics plc provides automated consumer financial services via its network of automated teller machines (ATMs) and multi-function financial services kiosks. The company sports a Zacks Rank #1 (Strong Buy) and came up with average four-quarter beat of 50.24%. You can see the complete list of today’s Zacks #1 Rank stocks here.
EVERTEC engages in transaction processing business, serving financial institutions, merchants, corporations and government agencies in Latin America and the Caribbean. The stock carries a Zacks Rank of 2 and pulled off average earnings surprise of 16.99% over the last four reported quarters.
Green Dot operates as a pro-consumer bank holding company, providing personal banking for the masses. The company has a Zacks Rank of 1 and delivered average four-quarter positive surprise of 18.40%.
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