Yesterday,
MasterCard Incorporated
(
MA
) provided a framework, which aimed at the advancement of the
electronic payment technology used in the US. The company intends
to make payment methods more secure by shifting from the magnetic
strips used in debit and credit cards at present to a chip-based
technology called EVM.
The EVM technology can be used with any kind of payment device,
including cards, mobile phones and e-commerce. MasterCard was
involved in the development of the technology and believes that it
will increase security and reduce fraudulent transactions.
Moreover, the company believes that dynamic authentication will
reduce frauds by providing a unique identity to each transaction,
which in turn will make duplication difficult.
Consequently, MasterCard is focusing on infrastructure
development and is encouraging acquirers to prepare the required
infrastructure by April 2013. Additionally, the company plans to
offer financial incentives to merchants in order to encourage them
to shift to terminals compatible with the EVM technology.
MasterCard believes that the entire industry needs to work
together to upgrade the payment system so as to minimize any form
of disruption and provide seamless transformation to the new
technology.
MasterCard's rival
Visa Inc.
(
V
) also supports the EVM technology and is encouraging merchants to
upgrade their technology.
Earnings Review
MasterCard's third-quarter 2011 operating earnings of $5.63 per
share came in drastically ahead of the Zacks Consensus Estimate of
$4.81 and $3.94 per share earned in the year-ago quarter. Moreover,
net income for the reported quarter stood at $717 million, spiking
38.4% from $518 million in the prior-year quarter.
The Zacks Consensus Estimate for MasterCard's fourth-quarter
2011 earnings is pegged at $3.91 per share, up about 24% from the
year-ago quarter. Eight out of 27 analysts reduced their earnings
estimates in the past 30 days, while only one upward revision was
witnessed.
For 2011, the company's earnings are expected to be $18.58 per
share, growing about 32% from 2010. Additionally, MasterCard's 2012
earnings are expected to be about $21.53 per share, up16% year over
year. The company is scheduled to release the financial results for
its fourth quarter and full year 2011 before the market opens on
February 2, 2012.
MasterCard currently carries a Zacks #3 Rank, implying a
short-term Hold rating. Furthermore, based on the fundamentals we
maintain our long-term Neutral recommendation on the stock.
MASTERCARD INC (
MA
): Free Stock Analysis Report
VISA INC-A (
V
): Free Stock Analysis Report
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