Recently, we reiterated our recommendation on
) at Neutral based on its steady operating growth and financial
sturdiness. However, intense competition and regulatory
challenges simultaneously raise caution.
Why the Retention?
Estimates for MasterCard have remained steady since the
company reported its second-quarter 2013 results on Jul 31. The
company's earnings per share of $6.96 and revenues of $2.1
billion exceeded the Zacks Consensus Estimate by 10.1% and 5%,
Moreover, both top and bottom line surpassed the year-ago
results by 15.2% and 23.2%, respectively, based on the number of
processed transactions, strong gross dollar value (GDV) growth
and global purchase volumes. Lower-than-expected expenses
also drove the margins and cash flow.
Following the release of the second-quarter results, the Zacks
Consensus Estimate for 2013 edged up 2.3% to $26.15 per share in
the last 60 days. Additionally, the Zacks Consensus Estimate for
2014 inched up 2.5% to $30.81 a share. With the Zacks Consensus
Estimate for both 2013 and 2014 showing slight upward pressure on
the stock in the near term, the company now has a Zacks Rank #2
However, the Most Accurate Estimate for MasterCard's 2013
earnings stands at $26.08 a share, resulting in a negative
While intense global competition coupled with increased
regulatory compliances, litigations and currency fluctuations
deter the desired upside in the stock, MasterCard's growth is
sustained by its consistent credit quality, diversified business
mix, strong secular demand growth, meaningful international
exposure excellent pricing power and impressive operating
Strong alliances and acquisitions along with technological
upgrades also bode well for long-term growth. Moreover, the 100%
hike in dividends earlier this year and accelerated share
buybacks reflect superior liquidity and a risk-free balance
sheet, overall boosting investor confidence.
Other Financial Stocks That Warrant a Look
Along with MasterCard, other stocks in the financial sector
that are outperforming include
Official Payments Holdings Inc.
Total System Services Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
MASTERCARD INC (MA): Free Stock Analysis
OFFICIAL PAYMNT (OPAY): Get Free Report
TOTAL SYS SVC (TSS): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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