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Why Is Mastercard (MA) Up 4.7% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Mastercard Incorporated (MA - Free Report) . Shares have added about 4.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mastercard Incorporated (MA - Free Report) reported first-quarter 2017 earnings of $1.01 per share, which surpassed the Zacks Consensus Estimate of $0.94 by 7.4%. Also, earnings improved 17.4% year over year. The quarter witnessed robust growth in bottom line and top line, fueled by strong transaction and volume levels.
Net income was $1.1 billion, up 12.7% from the prior-year quarter.
Behind the First-Quarter Headlines
MasterCard posted revenues of $2.73 billion for the reported quarter, which topped the Zacks Consensus Estimate of $2.64 billion. On a year-over-year basis, revenues increased 11.8%. The upside was primarily driven by a 17% rise in the number of switched transactions to 14.7 billion along with a 13% increase in cross-border volumes. These were partially offset by higher rebates and incentives, mainly due to new and renewed agreements and increased volumes.
During the reported quarter, worldwide purchase volume was $862 billion. About 2.4 billion MasterCard and Maestro branded cards were issued as of Mar 31, 2017.
MasterCard witnessed a year-over-year increase of 11.8% in total operating expenses to $1.23 billion owing to higher cost components like general and administrative expenses, advertising and marketing costs as well as provision for litigation settlement. The increase was attributable to continued investments in strategic initiatives as well as higher advertising and marketing spend.
Operating income was $1.5 billion in the reported quarter, up 11.7% year over year. Interest expenses jumped to $39 million from $20 million in the prior-year quarter.
The company delivered an adjusted operating margin of 55.6%.
Financial Update
As of Mar 31, 2017, the company’s cash and cash equivalents were $6 billion, down 10.6% from $6.7 billion at year-end 2016. Long-term debt inched up 0.7% to $5.22 billion from $5.18 billion as of Dec 31, 2016. Total equity dipped 0.8% to $5.64 billion from $5.68 billion at Dec 31, 2016.
Share Repurchase Update
During the reported quarter, MasterCard repurchased around 9 million shares of Class A common stock worth $1 billion.
How Have Estimates Been Moving Since Then?
Following the release and in the last month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, Mastercard's stock has a nice score of 'B', on both growth and momentum front. However, 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Mastercard (MA) Up 4.7% Since the Last Earnings Report?
A month has gone by since the last earnings report for Mastercard Incorporated (MA - Free Report) . Shares have added about 4.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mastercard Q1 Earnings & Revenues Beat, Increase Y/Y
Mastercard Incorporated (MA - Free Report) reported first-quarter 2017 earnings of $1.01 per share, which surpassed the Zacks Consensus Estimate of $0.94 by 7.4%. Also, earnings improved 17.4% year over year. The quarter witnessed robust growth in bottom line and top line, fueled by strong transaction and volume levels.
Net income was $1.1 billion, up 12.7% from the prior-year quarter.
Behind the First-Quarter Headlines
MasterCard posted revenues of $2.73 billion for the reported quarter, which topped the Zacks Consensus Estimate of $2.64 billion. On a year-over-year basis, revenues increased 11.8%. The upside was primarily driven by a 17% rise in the number of switched transactions to 14.7 billion along with a 13% increase in cross-border volumes. These were partially offset by higher rebates and incentives, mainly due to new and renewed agreements and increased volumes.
During the reported quarter, worldwide purchase volume was $862 billion. About 2.4 billion MasterCard and Maestro branded cards were issued as of Mar 31, 2017.
MasterCard witnessed a year-over-year increase of 11.8% in total operating expenses to $1.23 billion owing to higher cost components like general and administrative expenses, advertising and marketing costs as well as provision for litigation settlement. The increase was attributable to continued investments in strategic initiatives as well as higher advertising and marketing spend.
Operating income was $1.5 billion in the reported quarter, up 11.7% year over year. Interest expenses jumped to $39 million from $20 million in the prior-year quarter.
The company delivered an adjusted operating margin of 55.6%.
Financial Update
As of Mar 31, 2017, the company’s cash and cash equivalents were $6 billion, down 10.6% from $6.7 billion at year-end 2016. Long-term debt inched up 0.7% to $5.22 billion from $5.18 billion as of Dec 31, 2016. Total equity dipped 0.8% to $5.64 billion from $5.68 billion at Dec 31, 2016.
Share Repurchase Update
During the reported quarter, MasterCard repurchased around 9 million shares of Class A common stock worth $1 billion.
How Have Estimates Been Moving Since Then?
Following the release and in the last month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Mastercard Incorporated Price and Consensus
Mastercard Incorporated Price and Consensus | Mastercard Incorporated Quote
VGM Scores
At this time, Mastercard's stock has a nice score of 'B', on both growth and momentum front. However, 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.