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 Nasdaq, Inc.

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

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