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MasterCard (MA) Up 2.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for MasterCard (MA - Free Report) . Shares have added about 2.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Mastercard Q2 Earnings Beat Estimates on Volume Growth
Mastercard Incorporated reported second-quarter earnings of $1.89 per share, beating the Zacks Consensus Estimate by 3.9%. Earnings improved 3.9% year over year.
Better-than-expected results were primarily backed by higher switched transactions, increase in cross-border volume and gross dollar volume, and gains from acquisitions. An increase in rebates and incentives year over year was a partial dampener.
Strong Operational Performance
Mastercard’s revenues of $4.1 billion were in line with the Zacks Consensus Estimate and were up 15% year over year.
Total adjusted operating expenses rose 17% to $1.7 billion, due to the company’s continued investments in strategic initiatives. Interest expenses of $51 million increased 6.3% year over year.
Adjusted operating margin contracted 40 basis points to 58.3%.
Gross dollar volume increased 13% to $1.6 trillion while cross-border volumes were up 16% on a local-currency basis.
The company’s margins gained from a lower tax rate of 18.5% in the second quarter compared with 18.8% in the year-ago quarter.
As of Jun 30, 2019, the company’s customers had issued 2.6 billion Mastercard and Maestro-branded cards.
Financial Update
As of Jun 30, 2019, the company’s cash and cash equivalents were $5.86 billion, down 12.3% year over year. Long-term debt was $5.8 billion, almost unchanged relative to Dec 31, 2018 levels.
Share Repurchase and Dividend Payment
During the reported quarter, Mastercard repurchased shares worth $1.9 billion and paid out $337 million in dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, MasterCard has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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.
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.
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MasterCard (MA) Up 2.2% 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 2.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Mastercard Q2 Earnings Beat Estimates on Volume Growth
Mastercard Incorporated reported second-quarter earnings of $1.89 per share, beating the Zacks Consensus Estimate by 3.9%. Earnings improved 3.9% year over year.
Better-than-expected results were primarily backed by higher switched transactions, increase in cross-border volume and gross dollar volume, and gains from acquisitions. An increase in rebates and incentives year over year was a partial dampener.
Strong Operational Performance
Mastercard’s revenues of $4.1 billion were in line with the Zacks Consensus Estimate and were up 15% year over year.
Total adjusted operating expenses rose 17% to $1.7 billion, due to the company’s continued investments in strategic initiatives. Interest expenses of $51 million increased 6.3% year over year.
Adjusted operating margin contracted 40 basis points to 58.3%.
Gross dollar volume increased 13% to $1.6 trillion while cross-border volumes were up 16% on a local-currency basis.
The company’s margins gained from a lower tax rate of 18.5% in the second quarter compared with 18.8% in the year-ago quarter.
As of Jun 30, 2019, the company’s customers had issued 2.6 billion Mastercard and Maestro-branded cards.
Financial Update
As of Jun 30, 2019, the company’s cash and cash equivalents were $5.86 billion, down 12.3% year over year. Long-term debt was $5.8 billion, almost unchanged relative to Dec 31, 2018 levels.
Share Repurchase and Dividend Payment
During the reported quarter, Mastercard repurchased shares worth $1.9 billion and paid out $337 million in dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, MasterCard has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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.
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.