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Mastercard (MA) to Report Q1 Earnings: What's in the Offing?

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Mastercard Incorporated (MA - Free Report) is set to report first-quarter 2019 earnings on Apr 30.

The Zacks Consensus Estimate for earnings is $1.67 per share on revenues of $3.88 billion, which translates into year-over-year growth of 11.3% and 8.3%, respectively.

Factors to Affect Q1 Results

The company continues to see a strong secular shift to electronic forms of payment, which is driving healthy double-digit volume and transaction growth across most of its markets.

We expect to see an increase in net revenue primarily driven by strong volume and transaction growth, as well as growth in services offerings, partially offset by higher rebates and incentives.

The company expects revenue growth to be 2 percentage points lower than the low teens revenue growth rate expected for the whole year. This will be primarily due to the difficult year-over-year comps.

Also, the company expects foreign exchange to have a 2% adverse impact on annual revenue growth. Given the current strength in the U.S. dollar, a 5% negative impact on first-quarter revenue growth is expected.

We expect a slowdown in the company’s cross-border business volumes on difficult year-over-year comps due to strong cross-border growth experienced in 2018. In January, the company lapped significant cryptocurrency wallet funding and witnessed strong European activity impact due to the timing of certain holidays a year ago.

The company expects operating expenses in the year to increase at the high end of the high single-digit range due to investments to expand digital solutions, safety and security products, data analytics, geographic presence and platforms to boost flow of payments. Therefore, we expect to see escalated expenses for the first quarter.

Earnings Surprise History

The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters with an average beat of 8.7%. This is depicted in the chart below:

Mastercard Incorporated Price and EPS Surprise

Here is what our quantitative model predicts:

Our proven model does not conclusively show that Mastercard is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Mastercard has an Earnings ESP of -0.56%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Mastercard carries a Zacks Rank #3 but an Earnings ESP of -0.56% leaves our surprise prediction inconclusive.

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming release.

Square, Inc. (SQ - Free Report) has an Earnings ESP of +5.5% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Credit Acceptance Corporation (CACC - Free Report)   has an Earnings ESP of +0.08% and a Zacks Rank #2.

Diebold Nixdorf Inc. (DBD - Free Report) has an Earnings ESP of +5.71% and a Zacks Rank #2.

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