MasterCard Shares Reach 52-Week High - Analyst Blog

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On May 13, 2013, shares of MasterCard Inc. ( MA ) 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 well.

Total revenue grew 8.4% year over year to $1.91 billion, although it marginally lagged the Zacks Consensus Estimate of $1.93 billion.

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 Visa Inc. ( V ), Fidelity National Information Services, Inc. ( FIS ) and Vantiv, Inc. ( VNTV ). All these companies carry a Zacks Rank #2 (Buy).



FIDELITY NAT IN (FIS): Free Stock Analysis Report

MASTERCARD INC (MA): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

VANTIV INC-A (VNTV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: FIS , GDV , MA , V , VNTV

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