On May 13, 2013, shares of
) reached a 52-week high of $558.41 per share. The momentum was
driven by the company's strong first-quarter earnings as well as
a track record of outperforming estimates. MasterCard generated
positive earnings surprise in the last four quarters with an
average surprise of 1.95%.
On May 1, 2013, MasterCard reported first-quarter 2013
operating earnings per share of $6.23, which comfortably
surpassed the Zacks Consensus Estimate of $6.19 by 0.7%. Results
significantly beat the year-ago quarter's earnings of $5.36 as
Total revenue grew 8.4% year over year to $1.91 billion,
although it marginally lagged the Zacks Consensus Estimate of
The reported quarter experienced better pricing, increased
number of processed transactions, strong gross dollar value (GDV)
growth and marginal growth in tax rate, which further led to
higher-than-expected operating cash flow. Modest growth in
operating expenses also supported the margins' upside.
Moreover, MasterCard enjoys ample competitive advantage in
terms of a sufficiently risk-free balance sheet, thus generating
incremental shareholder value through efficient capital
deployment. In addition, the recent acquisition and alliances,
technology upgrades along with other product-diversification and
geographic-expansion initiatives are expected to enhance growth
in the long-term.
Further, the valuation of MasterCard looks reasonable. The
shares are currently trading at a premium to the peer group
average on both a price-to-earnings and a price-to-book basis.
However, its return on equity of 42.5% is also higher than the
peer group average of 21.6%.
MasterCard currently carries a Zacks Rank #3 (Hold). Other
companies in the financial transaction services business that are
worth considering are
Fidelity National Information Services, Inc.
). All these companies carry a Zacks Rank #2 (Buy).
FIDELITY NAT IN (FIS): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
VANTIV INC-A (VNTV): Free Stock Analysis
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