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.
MasterCard (MA) Up 0.2% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for MasterCard (MA - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MasterCard due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Mastercard Q1 Earnings Beat on Steady Spending, '24 View Cut
Mastercard reported strong first-quarter 2024 results on the back of resilient consumer spending and solid cross-border volumes. Despite higher-than-average inflation and a high-interest rate environment, higher card spending by U.S. consumers continues to support Mastercard’s results. An expanding payment network and value-added services and solutions also contributed to the quarterly results.
However, the upside was partly offset by an increase in operating expenses. Also, investors might worry about its revenue guidance cut. Furthermore, the recent appreciation of the U.S. dollar is expected to pose a challenge for foreign exchange, turning it into a headwind.
Mastercard reported first-quarter 2024 adjusted earnings of $3.31 per share, which outpaced the Zacks Consensus Estimate by 2.8%. The bottom line climbed 18% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $6.3 billion, which improved 10% year over year in the quarter under review. The top line beat the consensus mark by 0.4%.
Q1 Operational Performance
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) rose 10% on a local-currency basis to $2.3 trillion in the first quarter. The figure missed the Zacks Consensus Estimate by 2.5%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) advanced 18% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 36.7 billion in the quarter under review. The figure grew 13% year over year and beat the consensus mark by 2.2% and our estimate by 3.8%.
Value-added services and solutions net revenues of $2.4 billion improved 16% year over year and came higher than our model estimate of $2.3 billion. The growth can be attributed to the continued demand for its consulting and marketing services, loyalty solutions, as well as fraud and security capabilities.
Payment network rebates and incentives escalated 20% year over year in the first quarter as an impact of new and renewed deals.
Mastercard’s clients issued 3.4 billion Mastercard and Maestro-branded cards as of Mar 31, 2024.
Adjusted operating expenses of $2.6 billion increased 9% year over year due to elevated general and administrative expenses and met our estimate.
MA’s operating income advanced 15% year over year to $3.6 billion but fell short of our estimate of $3.7 billion. Operating margin of 56.8% improved 220 basis points year over year in the quarter under review.
Financial Position (as of Mar 31, 2024)
Mastercard exited the first quarter with cash and cash equivalents of $7.3 billion, which increased from the 2023-end level of $8.6 million. The figure is way higher than the short-term debt ($2.1 billion).
Total assets of $42.6 billion grew from the $42.4 billion figure at 2023 end.
Long-term debt amounted to $13.5 billion, down from the $14.3 billion figure as of Mar 31, 2023.
Total equity of $7.3 billion improved from the 2023-end level of $7 billion.
Mastercard generated cash flows from operations of $1.7 billion in the first quarter, which declined from the year-ago level of $1.9 billion.
Capital Deployment Update
Mastercard bought back 4.4 million shares for $2 billion in the first quarter. It had a leftover buyback capacity of $11.3 billion as of Apr 26, 2024. It bought back another 1.7 million shares for $815 million in the quarter-to-date period through Apr 26. Mastercard paid out dividends worth $616 million in the quarter under review.
2Q24 Guidance
Management projects net revenues to register high-end of high-single-digit growth on a year-over-year basis in the second quarter of 2024, while adjusted operating expenses are anticipated to record a high-end of high-single-digit growth as well.
2024 View
Management now expects net revenue growth to witness the low-end of low-double-digit growth from the 2023 reported figure of $25.1 billion. Earlier, it expected high-end of low-double-digit growth. Adjusted operating expenses are estimated to increase in low-end of low-double-digit from the 2023 figure of $10.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, MasterCard has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MasterCard has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MasterCard belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Equifax (EFX - Free Report) , has gained 2.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Equifax reported revenues of $1.39 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $1.50 for the same period compares with $1.43 a year ago.
Equifax is expected to post earnings of $1.72 per share for the current quarter, representing a year-over-year change of +0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Equifax has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
MasterCard (MA) Up 0.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for MasterCard (MA - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MasterCard due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Mastercard Q1 Earnings Beat on Steady Spending, '24 View Cut
Mastercard reported strong first-quarter 2024 results on the back of resilient consumer spending and solid cross-border volumes. Despite higher-than-average inflation and a high-interest rate environment, higher card spending by U.S. consumers continues to support Mastercard’s results. An expanding payment network and value-added services and solutions also contributed to the quarterly results.
However, the upside was partly offset by an increase in operating expenses. Also, investors might worry about its revenue guidance cut. Furthermore, the recent appreciation of the U.S. dollar is expected to pose a challenge for foreign exchange, turning it into a headwind.
Mastercard reported first-quarter 2024 adjusted earnings of $3.31 per share, which outpaced the Zacks Consensus Estimate by 2.8%. The bottom line climbed 18% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $6.3 billion, which improved 10% year over year in the quarter under review. The top line beat the consensus mark by 0.4%.
Q1 Operational Performance
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) rose 10% on a local-currency basis to $2.3 trillion in the first quarter. The figure missed the Zacks Consensus Estimate by 2.5%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) advanced 18% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 36.7 billion in the quarter under review. The figure grew 13% year over year and beat the consensus mark by 2.2% and our estimate by 3.8%.
Value-added services and solutions net revenues of $2.4 billion improved 16% year over year and came higher than our model estimate of $2.3 billion. The growth can be attributed to the continued demand for its consulting and marketing services, loyalty solutions, as well as fraud and security capabilities.
Payment network rebates and incentives escalated 20% year over year in the first quarter as an impact of new and renewed deals.
Mastercard’s clients issued 3.4 billion Mastercard and Maestro-branded cards as of Mar 31, 2024.
Adjusted operating expenses of $2.6 billion increased 9% year over year due to elevated general and administrative expenses and met our estimate.
MA’s operating income advanced 15% year over year to $3.6 billion but fell short of our estimate of $3.7 billion. Operating margin of 56.8% improved 220 basis points year over year in the quarter under review.
Financial Position (as of Mar 31, 2024)
Mastercard exited the first quarter with cash and cash equivalents of $7.3 billion, which increased from the 2023-end level of $8.6 million. The figure is way higher than the short-term debt ($2.1 billion).
Total assets of $42.6 billion grew from the $42.4 billion figure at 2023 end.
Long-term debt amounted to $13.5 billion, down from the $14.3 billion figure as of Mar 31, 2023.
Total equity of $7.3 billion improved from the 2023-end level of $7 billion.
Mastercard generated cash flows from operations of $1.7 billion in the first quarter, which declined from the year-ago level of $1.9 billion.
Capital Deployment Update
Mastercard bought back 4.4 million shares for $2 billion in the first quarter. It had a leftover buyback capacity of $11.3 billion as of Apr 26, 2024. It bought back another 1.7 million shares for $815 million in the quarter-to-date period through Apr 26. Mastercard paid out dividends worth $616 million in the quarter under review.
2Q24 Guidance
Management projects net revenues to register high-end of high-single-digit growth on a year-over-year basis in the second quarter of 2024, while adjusted operating expenses are anticipated to record a high-end of high-single-digit growth as well.
2024 View
Management now expects net revenue growth to witness the low-end of low-double-digit growth from the 2023 reported figure of $25.1 billion. Earlier, it expected high-end of low-double-digit growth. Adjusted operating expenses are estimated to increase in low-end of low-double-digit from the 2023 figure of $10.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, MasterCard has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MasterCard has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MasterCard belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Equifax (EFX - Free Report) , has gained 2.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Equifax reported revenues of $1.39 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $1.50 for the same period compares with $1.43 a year ago.
Equifax is expected to post earnings of $1.72 per share for the current quarter, representing a year-over-year change of +0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Equifax has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.