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.
Why Mastercard's (MA) Cross-Border Growth is Beneficial for You
Read MoreHide Full Article
Mastercard Incorporated (MA - Free Report) is riding on cross-border volume growth, which is evident from its past few quarters’ performances. As travel restrictions continue to disappear, MA’s cross-border volumes are paving way for lucrative growth. The metric has significant weightage in the company’s revenue generation. Also, geographical expansion and Digital First solutions will keep triggering growth.
In the first nine months of 2022, cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 51% year over year on a local-currency basis. During this period, the metric comprised 29.3% of Mastercard’s net revenues compared with 24% a year ago. Things are not expected to cool down yet.
In 2019, cross-border volume fees comprised 33.2% of Mastercard’s net revenues before the COVID-19 pandemic struck down traveling. In 2020, cross-border volume fees plunged 37%. Given the current environment, where international travel continues to recover, Mastercard’s cross-border volume fees are bound to go up.
Moreover, international air travel is far from completing its full recovery. Analysts expect it to return to pre-pandemic levels by the December quarter of 2022 or early 2023. This will continue supporting this Zacks Rank #3 (Hold) company’s cross-border volumes in the coming days. Investors holding the stock are expected to benefit strongly from this growth.
Other Key Drivers
Its solid market position and an attractive core business that continues to be driven by new deals, renewed agreements and an expansion of service offerings, should sustain long-term growth. Ongoing initiatives, including digital strategy and continued widening geographic footprints, create further optimism.
Even though MA suspended business operations in Russia in March 2022, its focus on developing regions in Indo-Pacific and South America will likely offset the negatives and keep increasing transaction volumes. In the first nine months of 2022, transaction processing revenues jumped 19% year over year.
Estimates
The Zacks Consensus Estimate for MA’s 2022 and 2023 revenues indicate a 17.3% and 12.7% year-over-year rise, respectively. The consensus mark for the 2022 and 2023 bottom line signals 26.1% and 14.1% year-over-year growth, respectively. It beat earnings estimates in each of the last four quarters, with an average of 11.8%.
For the fourth quarter of 2022, management anticipates both net revenues and operating expenses to register low-end to low-double-digit growth from the year-ago quarter’s reported figure.
Risk
Mastercard’s valuation remains stretched at the current level. It currently has a forward 12-month price-to-earnings ratio of 28.85X, much higher than the industry average of 20.70X. Despite its overvalued state, investors might agree to pay the premium, considering its long-term potential.
Price Movements
Shares of Mastercard have increased 7% in the past year against the industry’s 13.4% fall.
Based in Henderson, NV, PaySign offers prepaid card products and processing services. The Zacks Consensus Estimate for PAYS’s 2022 earnings indicates a 340% year-over-year surge.
Headquartered in Parsippany, NJ, Avis Budget Group provides car and truck rental and other services. The Zacks Consensus Estimate for CAR’s 2022 bottom line signals 134.6% year-over-year growth.
Morehead, KY-based AppHarvest works as an applied agricultural technology firm. The Zacks Consensus Estimate for APPH’s 2022 bottom line indicates a 13.9% year-over-year improvement.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Why Mastercard's (MA) Cross-Border Growth is Beneficial for You
Mastercard Incorporated (MA - Free Report) is riding on cross-border volume growth, which is evident from its past few quarters’ performances. As travel restrictions continue to disappear, MA’s cross-border volumes are paving way for lucrative growth. The metric has significant weightage in the company’s revenue generation. Also, geographical expansion and Digital First solutions will keep triggering growth.
In the first nine months of 2022, cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 51% year over year on a local-currency basis. During this period, the metric comprised 29.3% of Mastercard’s net revenues compared with 24% a year ago. Things are not expected to cool down yet.
In 2019, cross-border volume fees comprised 33.2% of Mastercard’s net revenues before the COVID-19 pandemic struck down traveling. In 2020, cross-border volume fees plunged 37%. Given the current environment, where international travel continues to recover, Mastercard’s cross-border volume fees are bound to go up.
Moreover, international air travel is far from completing its full recovery. Analysts expect it to return to pre-pandemic levels by the December quarter of 2022 or early 2023. This will continue supporting this Zacks Rank #3 (Hold) company’s cross-border volumes in the coming days. Investors holding the stock are expected to benefit strongly from this growth.
Other Key Drivers
Its solid market position and an attractive core business that continues to be driven by new deals, renewed agreements and an expansion of service offerings, should sustain long-term growth. Ongoing initiatives, including digital strategy and continued widening geographic footprints, create further optimism.
Even though MA suspended business operations in Russia in March 2022, its focus on developing regions in Indo-Pacific and South America will likely offset the negatives and keep increasing transaction volumes. In the first nine months of 2022, transaction processing revenues jumped 19% year over year.
Estimates
The Zacks Consensus Estimate for MA’s 2022 and 2023 revenues indicate a 17.3% and 12.7% year-over-year rise, respectively. The consensus mark for the 2022 and 2023 bottom line signals 26.1% and 14.1% year-over-year growth, respectively. It beat earnings estimates in each of the last four quarters, with an average of 11.8%.
For the fourth quarter of 2022, management anticipates both net revenues and operating expenses to register low-end to low-double-digit growth from the year-ago quarter’s reported figure.
Risk
Mastercard’s valuation remains stretched at the current level. It currently has a forward 12-month price-to-earnings ratio of 28.85X, much higher than the industry average of 20.70X. Despite its overvalued state, investors might agree to pay the premium, considering its long-term potential.
Price Movements
Shares of Mastercard have increased 7% in the past year against the industry’s 13.4% fall.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks in the broader Business Services space are PaySign, Inc. (PAYS - Free Report) , Avis Budget Group, Inc. (CAR - Free Report) and AppHarvest, Inc. , 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.
Based in Henderson, NV, PaySign offers prepaid card products and processing services. The Zacks Consensus Estimate for PAYS’s 2022 earnings indicates a 340% year-over-year surge.
Headquartered in Parsippany, NJ, Avis Budget Group provides car and truck rental and other services. The Zacks Consensus Estimate for CAR’s 2022 bottom line signals 134.6% year-over-year growth.
Morehead, KY-based AppHarvest works as an applied agricultural technology firm. The Zacks Consensus Estimate for APPH’s 2022 bottom line indicates a 13.9% year-over-year improvement.