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MasterCard (MA) Up 4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for MasterCard (MA - Free Report) . Shares have added about 4% in that time frame, outperforming 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 drivers.
Mastercard Q2 Earnings Beat on Strong Cross-Border Volumes
Mastercard reported second-quarter 2024 adjusted earnings of $3.59 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The bottom line climbed 24.2% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $7 billion, which improved 11% year over year in the quarter under review. The top line beat the consensus mark by 1.7%.
MA’s strong second-quarter 2024 results benefited from resilient consumer spending and solid cross-border volumes. Higher demand for its value-added services and solutions and an expanding payment network also favored the results. However, the upside was partly offset by an increase in operating expenses.
Q2 Operational Performance
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) rose 9% on a local-currency basis to $2.4 trillion in the second quarter. The figure missed the Zacks Consensus Estimate by 3%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) increased 17% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 39.4 billion in the quarter under review. The figure grew 11% year over year and beat the consensus mark by 2.2% and our estimate by nearly 1%.
Value-added services and solutions net revenues improved 18% year over year. 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 14% year over year in the second quarter as an impact of new and renewed deals.
Mastercard’s clients issued 3.4 billion Mastercard and Maestro-branded cards as of Jun 30, 2024.
Adjusted operating expenses of $2.8 billion increased 9% year over year due to elevated general and administrative expenses and met our estimate.
The company’s operating income rose 10% year over year to $4 billion and beat our estimate by a whisker. Operating margin of 58% deteriorated 40 basis points year over year in the quarter under review.
Financial Position (as of Jun 30, 2024)
Mastercard exited the second quarter with cash and cash equivalents of $7 billion, which decreased from the 2023-end level of $8.6 million. The figure is way higher than the short-term debt of $1.1 billion.
Total assets of $42.3 billion declined slightly from the $42.4 billion figure at 2023-end.
Long-term debt amounted to $14.5 billion, up from $14.3 billion as of Dec 31, 2023.
Total equity of $7.5 billion improved from the 2023-end level of $7 billion.
Mastercard generated cash flows from operations of $4.8 billion in the first half of 2024, which rose from the year-ago level of $4.6 billion.
Capital Deployment Update
Mastercard bought back 10.2 million shares for $4.6 billion in the first half of 2024. It had a leftover buyback capacity of $8.7 billion as of Jul 26, 2024. It bought back another 1.9 million shares for $820 million in the quarter-to-date period through Jul 26. Mastercard paid out dividends worth $1.2 billion in the first half of 2024.
3Q24 Guidance
Management projects net revenues to register low-double-digit growth on a year-over-year basis in the third quarter of 2024, while adjusted operating expenses are anticipated to record low-double-digit growth as well.
2024 View Revised
Management now expects net revenue growth to witness the low-double-digit growth from the 2023 reported figure of $25.1 billion. Earlier, it expected low-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, fresh estimates 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, Visa (V - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Visa reported revenues of $8.9 billion in the last reported quarter, representing a year-over-year change of +9.6%. EPS of $2.42 for the same period compares with $2.16 a year ago.
For the current quarter, Visa is expected to post earnings of $2.57 per share, indicating a change of +10.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Visa. Also, the stock has a VGM Score of D.
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MasterCard (MA) Up 4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for MasterCard (MA - Free Report) . Shares have added about 4% in that time frame, outperforming 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 drivers.
Mastercard Q2 Earnings Beat on Strong Cross-Border Volumes
Mastercard reported second-quarter 2024 adjusted earnings of $3.59 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The bottom line climbed 24.2% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $7 billion, which improved 11% year over year in the quarter under review. The top line beat the consensus mark by 1.7%.
MA’s strong second-quarter 2024 results benefited from resilient consumer spending and solid cross-border volumes. Higher demand for its value-added services and solutions and an expanding payment network also favored the results. However, the upside was partly offset by an increase in operating expenses.
Q2 Operational Performance
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) rose 9% on a local-currency basis to $2.4 trillion in the second quarter. The figure missed the Zacks Consensus Estimate by 3%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) increased 17% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 39.4 billion in the quarter under review. The figure grew 11% year over year and beat the consensus mark by 2.2% and our estimate by nearly 1%.
Value-added services and solutions net revenues improved 18% year over year. 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 14% year over year in the second quarter as an impact of new and renewed deals.
Mastercard’s clients issued 3.4 billion Mastercard and Maestro-branded cards as of Jun 30, 2024.
Adjusted operating expenses of $2.8 billion increased 9% year over year due to elevated general and administrative expenses and met our estimate.
The company’s operating income rose 10% year over year to $4 billion and beat our estimate by a whisker. Operating margin of 58% deteriorated 40 basis points year over year in the quarter under review.
Financial Position (as of Jun 30, 2024)
Mastercard exited the second quarter with cash and cash equivalents of $7 billion, which decreased from the 2023-end level of $8.6 million. The figure is way higher than the short-term debt of $1.1 billion.
Total assets of $42.3 billion declined slightly from the $42.4 billion figure at 2023-end.
Long-term debt amounted to $14.5 billion, up from $14.3 billion as of Dec 31, 2023.
Total equity of $7.5 billion improved from the 2023-end level of $7 billion.
Mastercard generated cash flows from operations of $4.8 billion in the first half of 2024, which rose from the year-ago level of $4.6 billion.
Capital Deployment Update
Mastercard bought back 10.2 million shares for $4.6 billion in the first half of 2024. It had a leftover buyback capacity of $8.7 billion as of Jul 26, 2024. It bought back another 1.9 million shares for $820 million in the quarter-to-date period through Jul 26. Mastercard paid out dividends worth $1.2 billion in the first half of 2024.
3Q24 Guidance
Management projects net revenues to register low-double-digit growth on a year-over-year basis in the third quarter of 2024, while adjusted operating expenses are anticipated to record low-double-digit growth as well.
2024 View Revised
Management now expects net revenue growth to witness the low-double-digit growth from the 2023 reported figure of $25.1 billion. Earlier, it expected low-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, fresh estimates 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, Visa (V - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Visa reported revenues of $8.9 billion in the last reported quarter, representing a year-over-year change of +9.6%. EPS of $2.42 for the same period compares with $2.16 a year ago.
For the current quarter, Visa is expected to post earnings of $2.57 per share, indicating a change of +10.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Visa. Also, the stock has a VGM Score of D.