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Will Coronavirus Fallout Mar Mastercard's (MA) Q1 Earnings?

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Mastercard Inc.’s (MA - Free Report) first-quarter earnings results, scheduled to be announced on Apr 29, 2020, are likely to reflect business loss from coronavirus-induced economic slowdown.

The company’s cross-border business might have taken a hit from reduced travel across borders as people around the globe are increasingly sticking to social isolation measures as a form of precaution. Several travel bookings are already cancelled and cruise operators are considering suspending further bookings. The company is likely to have witnessed deterioration in its cross-border activities, switched volume and switched transaction metrics.

Along with a sharp descent in cross-border payment, which might have dented revenues from outside the United States, Mastercard is also expected to have suffered lower consumer spending across the country, which drives its domestic revenues.

Due to coronavirus, transaction processed from sales at Airlines, Lodging, Cruises, Online travel agencies and rental cars might have dwindled to almost null. Sales at restaurant, movie theaters, events and attractions, toys, entertainment, book retailers, music, arts and crafts plus education resources are also expected to have waned while sales of e-books, news media, music streaming, video streaming and gaming are likely to have seen an uptick. However, overall sales declin is likely to have weakened the number of transactions processed for the company, which in turn, might have affected its top line.   

The Zacks Consensus Estimate for GDV is pegged at $1.58 trillion, indicating a 6.7% increase year over year.

Mastercard expects first-quarter growth in net revenues in the low-single-digit range. Currency headwinds are anticipated to drag net revenue growth by about 2%.

Also, operating expenses in the quarter are expected to be in the low-to-mid single-digit range. Notably, the company took several actions to manage its expenses prudently including evaluation of travel & entertainment; advertising & marketing; and professional fees spending starting the first quarter itself.

Earnings & Revenue Expectations    

The Zacks Consensus Estimate for Mastercard’s first-quarter earnings of $1.75 per share indicates a 1.69% slip from the prior-year reported number. Likewise, the consensus estimate for sales of $3.96 billion suggests a 1.81% rise from the year-ago reported figure.

Earnings Surprise History

The company boasts an attractive surprise history, having surpassed on earnings in each of the last four quarters, the average being 5.72%. 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 predict a beat for Mastercard this earnings season. The right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive surprise.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Mastercard has an Earnings ESP of -1.59%.

Zacks Rank: Mastercard currently carries a Zacks Rank #3 (Hold).

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

Stocks That Warrant a Look

Here are some stocks worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this time around:

Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +41.57% and a Zacks Rank #1.

Green Dot Corp. (GDOT - Free Report) has an Earnings ESP of +1.08% and is Zacks #3 Ranked.

Heartland Financial USA, Inc. (HTLF - Free Report) has an Earnings ESP of +11.90% and a Zacks Rank of 3.

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