Global electronic payment processing giant -
) is scheduled to release its second-quarter 2014 financial results
before the opening bell on Jul 31.
In the last reported quarter, the company had delivered a
positive earnings surprise of 1.4%, while the four-quarter trailing
average beat is pegged at 3.3%. Let us see how things are shaping
up for this announcement.
Our proven model shows that MasterCard is not likely to beat
earnings this quarter as it lacks the required combination of two
: The Most Accurate estimate of 77 cents per share is at par with
the Zacks Consensus Estimate of MasterCard. Hence, the Expected
Surprise Prediction or
, which is the difference between the aforementioned estimates, is
: Though MasterCard's Zacks Rank #3 (Hold) increases the predictive
power of ESP, the company's ESP of 0.00% makes surprise prediction
Sell-rated stocks (#4 and 5) should never be considered going
into the earnings announcement, especially when the company is
witnessing negative estimate revisions momentum.
Factors that Seek Attention
As much of the fear regarding stringent regulations from Russia,
that loomed for most the second quarter, has alleviated now,
MasterCard is contemplating potential alliances with local
operators in Russia. The company faces intense regulatory
challenges across the major jurisdictions of the U.S. and European
Union, among others, as well.
Such regulations and sanctions not only hit the cross-border
transaction but also hamper margins. This is also evident from the
lower-than-expected cross-border volumes recorded by Visa Inc. (V)
in the past quarter.
Moreover, the addition of debt in balance sheet, along with
higher acquisition and operating expenses is likely to limit cash
flow growth. Furthermore, stiff competition, currency fluctuations
and economic volatility are likely to directly impact MasterCard's
spending and earnings.
Nevertheless, the strategic acquisitions (of ElectraCard
Services Pvt. Ltd. and Pinpoint Pty. Ltd. during the second
quarter) and alliances, launch of MasterPass in Singapore and New
Zealand, a diversified portfolio and technology upgrades are
expected to boost fundamentals and supports efficient capital
deployment, thereby retaining shareholder confidence.
Other Stocks to Consider
Here are some other financial companies you may want to consider
as our model shows they have the right combination of elements to
post an earnings beat this quarter:
Qiwi Plc (
) has Earnings ESP of +4.76% and a Zacks Rank #1 (Strong Buy).
United Insurance Holdings Corp. (
) has Earnings ESP of +2.33% and a Zacks Rank #1.
Lazard Ltd. (
) has Earnings ESP of +1.59% and a Zacks Rank #2 (Buy).
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MASTERCARD INC (MA): Free Stock Analysis Report
QIWI PLC-ADR (QIWI): Free Stock Analysis Report
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