Mastercard Inc. (MA) has projected slower-than-anticipated growth in net revenue for the fourth quarter, indicating potential alterations in expenditure volumes due to a potentially volatile economic environment fostering caution among consumers. The forecasted growth for the upcoming quarter's net revenue is in the low double-digit percentages.
According to Wall Street analysts, Mastercard's revenue and earnings per share (EPS) are anticipated to rise by 11.5% and 16.3% respectively, resulting in an estimated $6.48 billion and $3.08 for the quarter ended December 2023.
Although economic uncertainties are a concern, high-interest rates and inflation have proven beneficial for Mastercard, allowing the company to impose higher interest rates on its credit card customers. Moreover, steady wage growth has enabled consumers to sustain their expenditure on travel, shopping, and entertainment in the face of persistently high inflation.
In the last reported quarter, persistent consumer spending propelled Mastercard to exceed financial forecasts. The company achieved earnings of $3.39 per share, outperforming the consensus estimate of $3.21 per share. Concurrently, its net revenue witnessed a 14% hike, reaching $6.53 billion.
Despite the economic and geopolitical uncertainties, Mastercard's diversified business model should equip it favorably to seize significant opportunities within its domain. Thus, it might be prudent to consider MA as a worthwhile investment prior to its impending earnings report. Furthermore, a detailed examination of some of its key performance indicators could provide enlightening insights.
Analyzing Mastercard's Steady Financial Growth Through Its Net Income, Revenue, and Other Indicators
The following summarizes the trend and fluctuations in the trailing-12-month Net Income of MA over a period:
- As of March 31, 2021, the Net Income was $6.55 billion.
- A steady increase in Net Income was observed, reaching $8.69 billion by December 31, 2021.
- MA continued its upward trajectory in 2022, with the largest Net Income reported at $9.93 billion by the end of the year.
- In the first quarter of 2023, there was a slight dip in Net Income to $9.66 billion, but it quickly rebounded and continued to grow.
- By the end of the third quarter of 2023, Net Income reached an all-time high of $10.93 billion.
Overall, the trend for Mastercard's Net Income shows strong growth from the initial value of $6.55 billion in March 2021 to the latest value of $10.93 billion in September 2023, representing an impressive growth rate. The fluctuations were relatively mild, with only a minor drop at the beginning of 2023, but the general direction remained upwards.
The trailing-12-month revenue of MA has shown a consistent upward trend over the observed period.
- On March 31, 2021, the Revenue was $15.45 billion.
- This figure grew to $16.64 billion by June 30, 2021, signifying an approximate growth rate of 7.7% over the three-month period.
- Subsequent quarters in 2021 showed continued growth, reaching $17.79 billion in September 2021 and $18.88 billion by December 31, 2021.
This upward trend carried over into 2022, with each quarter witnessing gradual growth:
- MA's Revenue was $19.9 billion in March 2022, increasing to $20.87 billion by June 2022 and then hitting $21.64 billion in September 2022.
- The year 2022 ended with December Revenue standing at $22.24 billion, marking a momentous yearly leap.
Notably, in 2023, the positive trend persisted:
- At the end of the first quarter of 2023, on March 31, the Revenue stood at $22.82 billion.
- This rose sharply to $23.59 billion by the end of the second quarter, i.e., June 30, 2023.
- By the end of September 2023, the most recent data point, the Revenue had reached $24.37 billion.
Over the entire period from March 31, 2021, to September 30, 2023 the revenue of Mastercard Incorporated (MA) increased from $15.45 billion to $24.37 billion. This indicates a substantial growth rate of approximately 57.63%. This consistent rise in MA's revenue underscores a robust economic performance over the observed timeframe.
- Mastercard Incorporated (MA) started with an Asset Turnover of 0.468 on March 31, 2021.
- There has been a consistent increase in the Asset Turnover over time.
- The highest increment in the Asset Turnover was noticed between June 30, 2022 and September 30, 2022 with an increase from 0.57 to 0.582.
- As of September 30, 2023, the Asset Turnover has reached its peak at 0.623.
Looking at the overall trend and fluctuations in MA, Asset Turnover from March 31, 2021 to September 30, 2023, there has been a gentle upward trend. The MA’s Asset Turnover ratio has shown steady growth over the period, increasing by approximately 33.12% from the first recorded value.
In particular, recent data (from 2022 to 2023) shows a continued increase, indicating that MA’s efficiency in using its assets to generate sales is improving. As of the latest reported quarter ending September 2023, Mastercard's Asset Turnover ratio stands at 0.623, which marks an incremental growth compared to previous periods.
The Analyst Price Target data for Mastercard Incorporated (MA) showed a fluctuating trend from November 2021 through to January 2024.
- In November 2021, the Analyst Price Target was at $430.
- It remained steady at $430 in December 2021 before slightly increasing to $431.40 by January 2022.
- The highest value in the first quarter of 2022 was reached in February, at $437 but it remained relatively flat in March, ending at $437.32.
- A slight drop was observed in April 2022 to $433.57 but it rose again in May to $437.98. June saw a small decline to $435.
- Interestingly, July and August of 2022 observed a downward trend, bringing the values down to $416 and $415.28 respectively. This slight decline continued through September and October, lowering the values to $415.03 and $408 consequently.
- The price target hit its lowest point of $394.79 in November 2022 and made a slight recovery to $395.86 in December of the same year.
- A turn-around occurred in 2023, starting in January, climbing steeply to $400.20 and continuing to rise remarkably in February to $415. The price target stalled at around $415 through April before experiencing a surge in May 2023, raising the value to $429.87.
- The second half of 2023 saw a generally rising trend, reaching $450 in September and peaking at $450.55 in October.
- A minor dip occurred in November, bringing the value down to $445.11.
- Uniquely, December 2023 presented an insignificant increased trend position of $446.83 and finally settling at $450 in January 2024.
From the data, over the designated period, the value increased from $430 in November 2021 to $450 in January 2024, indicating an overall positive growth rate. However, the data series recorded an apparent downward movement from July 2022 through to November 2022 before it began to rise again in the early months of 2023. The year of 2023 saw the most realized growth in the Analyst Price Target.
Analyzing Fluctuations in Mastercard Incorporated's Share Prices Across Key Periods
Based on the given data, the following trends are noted for the share prices of Mastercard Incorporated (MA):
- From August 4, 2023, to September 15, 2023, the share price increased from $392.11 to $415.25, indicating a steady upward trend.
- A decline was observed between September 22, 2023, and October 27, 2023, with the share price dropping from $409.90 to $377.62.
- From November 3, 2023, to December 29, 2023, the share prices again showed a consistent upsurge, rising from $378.53 to $425.22.
- A slight dip was noticed on January 5, 2024, with the value decreasing to $420.32.
- The latter part of January 2024 experienced a significant rise, ending at a high of $438.85 on January 29, 2024.
In terms of growth rate: -
- The share price saw an increase of about 5.9% from August 4, 2023, to September 15, 2023.
- A decrease of approximately 8.4% was noticed from September 22, 2023, to October 27, 2023.
- An increase of roughly 12.3% was recorded from November 3, 2023, to December 29, 2023.
- A slight decrease of around 1.1% happened on January 5, 2024.
- A surge of approximately 4.4% was seen from January 5, 2024, to January 29, 2024.
Taking into consideration that these rates are over varying periods, the growth rate appears to be rather fluctuating over this timeframe. There are periods of noticeable growth, followed by periods of devaluation, and then further growth. Here is a chart of MA's price over the past 180 days.
Analyzing Mastercard Incorporated's Performance through Quality, Momentum, and Stability Ratings
MA has an overall B rating, translating to a Buy in our POWR Ratings system. It is ranked #4 out of the 46 stocks in the Consumer Financial Services category.
Mastercard Incorporated (MA) shows distinct performance across three dimensions in POWR Ratings: Quality, Momentum, and Stability. Below, we explore these dimensions across different time points:
Quality: August 31, 2023, the Quality rating was at 93. It remained consistent at 93 on September 30, 2023. On October 31, 2023, the Quality rating only slightly dropped to 92. In November 2023, the Quality rating still held at 92. By the end of 2023, this rating increased to a high of 96. On January 12, 2024, the Quality rating continued to hold at an impressive 96.
Momentum: On August 31, 2023, the Momentum rating stood at 62. By the end of September 2023, it improved to 65. It dropped significantly to 55 by October 31, 2023. The rating recovered back to 65 in November 2023. The Momentum rating shot up to 85 by December 30, 2023. On January 12, 2024, the Momentum rating saw a further increase to 91, showing a clear upward trend.
Stability: On August 31, 2023, the Stability rating was at a high of 93. It improved slightly to 94 on September 30, 2023. The Stability rating held stable at 94 on October 31, 2023. In November 2023, it decreased slightly to 92. Then, it dropped to 90 on December 30, 2023. As of January 12, 2024, the Stability rating stands at 91.
This data reveals that Quality consistently carries the highest ratings for Mastercard Incorporated (MA). Momentum, on the other hand, exhibited a clear upward trend from October 2023 to January 2024. The Stability rating, while high, has shown minor fluctuations over time.
How does Mastercard Incorporated (MA) Stack Up Against its Peers?
Other stocks in the Consumer Financial Services sector that may be worth considering are Regional Management Corp. (RM), 360 Finance, Inc. (QFIN) and Ezcorp Inc. (EZPW) -- they have better POWR Ratings.
What To Do Next?
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MA shares fell $0.48 (-0.11%) in premarket trading Tuesday. Year-to-date, MA has gained 3.46%, versus a 3.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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