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Mastercard Inc. (MA) and Visa, Inc. (V) released financial statements today. After some analysis and valuations, we found that both firms are in excellent financial condition. However, valuations may be nearing a peak.

Mastercard - BUY

  • High growth enterprise and investors are paying a premium for growth.
  • Valuations may be near an intermediate-term peak.
  • Revenue-share and book value-share growth is outstanding.
  • On a price-sales basis the firm is 25 percent more expensive Year/Year.
  • On a price-book value basis the firm is 20 percent more expensive Y/Y.
  • Credit, charge and debit programs worldwide revenue is increasing.
  • Solvency and liquidity ratios shouldn't worry investors.
  • Shares are trading above the rising 50-day simple moving average.
  • Common equity shares are up 22.4 percent year-to-date.
  • Conclusion: The long-term prospects are excellent given the business model and growth; valuations may be near peaks and investors should be cautious of an intermediate decline in share price.

(click charts to enlarge)

Visa - BUY

  • High growth enterprise and investors are paying a premium for growth.
  • Valuations may be near an intermediate-term peak.
  • Revenue-share and book value-share growth is outstanding.
  • Price-sales increased about 37 percent Y/Y.
  • Price-book value increased about 43 percent Y/Y.
  • Solvency and liquidity ratios shouldn't worry investors.
  • Shares are trading above the rising 50-day simple moving average.
  • Common equity shares are up 21.5 percent year-to-date.
  • Conclusion: The long-term prospects are excellent given the business model and growth; valuations may be near peaks and investors should be cautious of an intermediate decline in share price.

(click charts to enlarge)

Source: Valuation And Analysis Of Visa And Mastercard