On Dec 25, Zacks Investment Research upgraded
) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
MasterCard has been experiencing rising earnings estimates on
the back of improved operating leverage, which was evident in its
third-quarter 2013 earnings beat. Moreover, the company's
improved cash flow and latest capital actions have been
Additionally, this global electronic payment processor
delivered positive earnings surprises in all the last 4 quarters
with an average beat of 4.2%. MasterCard also outperformed the
one-year S&P 500 Index, which posted an increase of 28.8%
against the modest return of 66.5% clocked by the company.
On Oct 31, MasterCard reported third-quarter operating
earnings per share of $7.27, which modestly surpassed the Zacks
Consensus Estimate of $6.95 and the year-ago quarter number of
Although total operating expenses rose 13.6% over the
prior-year quarter, top line soared 15.6% based on better
pricing, increased number of processed transactions and strong
gross dollar value growth. Accordingly, operating income and
margins witnessed a boost and also drove the operating cash
MasterCard benefits from strong secular demand growth,
meaningful international exposure, high barriers, excellent
pricing power and balanced business mix. Moreover, the company's
latest capital plan including a 10-for-1 stock split and a 83%
hike in regular dividend continue to boost investors' confidence
in the stock.
We also remain optimistic of MasterCard's projection to
increase its total revenue from the U.S. operations in the
mid-to-high single-digit range, while that from international
operations to grow in double digits.
Based on MasterCard's capital adequacy and organic growth, the
Zacks Consensus Estimate for 2013 moved north by 7.3% to $26.35
per share in the last 60 days. The estimate for 2014 is pegged at
$31.10, up 0.9% over the same period. Meanwhile, the Most
Accurate estimate for MasterCard's 2013 earnings stands at $26.55
a share, resulting in an
Other Insurers Worth a Look
Investors interested in the financial industry may also
consider stocks like
Heartland Payment System Inc.
Higher One Holdings Inc.
Alliance Data Systems Corp.
). All these stocks carry the same Zacks Rank as MasterCard.
ALLIANCE DATA (ADS): Free Stock Analysis
HEARTLAND PAYMT (HPY): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
HIGHER ONE HLDG (ONE): Free Stock Analysis
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