) reported second-quarter 2013 operating earnings per share of
$6.96. The results remarkably beat the Zacks Consensus Estimate
of $6.32 and significantly surpassed the year-ago quarter figure
Net income for the reported quarter stood at $848 million, up
18.9% from $713 million in the prior-year quarter. Including the
post-tax litigation provision expense of $13 million, the
company's reported net income in the prior-year quarter stood at
$700 million. However, no special items were recorded in the
The better-than-expected results were largely due to the
outcome of better pricing, increased number of processed
transactions, strong gross dollar value (GDV) growth and nominal
growth in expenses. These factors also led to
higher-than-expected margins and operating cash flow.
Total revenue jumped 15.2% year over year and on constant
currency basis to $2.1 billion, also exceeding the Zacks
Consensus Estimate of $2.0 billion. The upside was primarily due
to an 11% surge in the number of processed transactions to 9.5
billion along with a 17% increase in cross-border volumes.
During the reported quarter, GDV increased 13% to $1.0
trillion, while worldwide purchase volume rose 12% year over
year, on a constant currency basis, to $734 billion. As of Jun
30, 2013, MasterCard had issued 1.9 billion MasterCard-and
Total operating expenses edged up 2.6% year over year to $868
million. The overall increase primarily resulted from an 8.9%
year-over-year surge in depreciation and amortization expenses
along with a 5.1% uptick in general and administrative expenses.
Moreover, advertising and marketing expenses climbed 3.9% over
the prior-year quarter.
Subsequently, operating income escalated 26.1% year over year
to $1.23 billion in the reported quarter. Likewise, core
operating margin rose to 58.6% from 54.6% in the year-ago
quarter. MasterCard's effective tax rate for the reported quarter
was 31.2%, higher than 28.0% in the year-ago period.
As of Jun 30, 2013, MasterCard's net operating cash flow
significantly augmented 51.1% year over year to $1.61 billion. At
the end of Jun 2013, cash and cash equivalents increased to $2.35
billion from $2.05 billion at 2012-end, while long-term debt
Meanwhile, retained earnings increased to $8.82 billion at the
end of Jun 2013 from $7.35 billion at 2012-end. Moreover, total
equity climbed to $7.03 billion from $6.93 billion at Dec
Share Repurchase Update
During the reported quarter, MasterCard repurchased about 1.1
million shares for $581 million. Until Jul-end, MasterCard bought
back an additional 296,000 shares for approximately $174 million
since the second quarter of 2013.
To date, about $1.1 million of stock remains available under
the latest $2.0 billion share repurchase program, which was
authorized in Feb 2013.
On May 9, 2013, MasterCard paid a regular quarterly dividend
of 60 cents per share to shareholders of record as on Apr 9,
2013. In Feb 2013, this dividend was hiked by 100% from 30 cents
On Jul 24, MasterCard's prime peer -
) - reported fiscal third-quarter (ended Jun 30, 2013) operating
earnings of $1.88 per Class A common share, which comfortably
exceeded the Zacks Consensus Estimate of $1.79 and the prior-year
quarter figure of $1.56 per share. Double-digit top-line growth
along with controlled expenses drove the improved results. Visa
carries a Zacks Rank #2 (Buy).
MasterCard carries a Zacks Rank #3 (Hold). Other outperforming
financial transaction service providers include
Heartland Payment Services Inc.
). Both the stocks carry a Zacks Rank #2 (Buy).
HEARTLAND PAYMT (HPY): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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