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Mastercard (MA) Q4 Earnings Beat Estimates, Revenues Match

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Mastercard Incorporated MA reported fourth-quarter earnings of $1.96 per share, beating the Zacks Consensus Estimate by 4.81%. Earnings improved 26% year over year.

Better-than-expected results were primarily driven by higher switched transactions, increase in cross-border volume and gross dollar volume, and gains from acquisitions. Increase in rebates and incentives year over year was a partial dampener.

Mastercard’s revenues of $4.4 billion met the Zacks Consensus Estimate and grew 16% year over year.

Mastercard Incorporated Price, Consensus and EPS Surprise


Full-Year Results

The company reported earnings per share of $7.77, up 20% on revenues of $16.9 billion, up 13% year over year.

Total adjusted operating expenses rose 12% to $2 billion, due to the company’s continued investment in strategic initiatives.

Adjusted operating margin of 54.4% was up 210 basis points year over year.
Gross dollar volume increased 12% to $1.7 trillion while cross-border volumes were up 16% on a local-currency basis.

As of Dec 31, 2019, the company’s customers had issued 2.6 billion Mastercard and Maestro-branded cards.

Share Repurchase and Dividend Payout

During the reported quarter, Mastercard repurchased shares worth $1 billion and paid out $333 million in dividends.

Our Take

Mastercard is poised to grow, given its solid market position, ongoing expansion and digital initiatives, plus significant opportunities from the secular shift toward electronic payments. Its numerous acquisitions have aided revenue growth.

However, escalating costs are likely to put pressure on the company’s bottom line. In order to gain customers and new business, Mastercard has been incurring high levels of costs under rebates and incentives, which remains a concern. Nevertheless, its strong balance sheet enables business investment, thereby driving growth.

Mastercard carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the same space are Envestnet, Inc. ENV, Global Payments Inc. (GPN - Free Report) and Fidelity National Information Services, Inc. FIS. Each of the stocks carries the same Zacks Rank as Mastercard. Envestnet, Global Payments and Fidelity National Information surpassed earnings estimates in each of the four trailing quarters with positive surprise of 3.51%, 2.42% and 2.92%, on average, respectively.

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