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- MasterCard's shares have gained roughly 20% over the last six weeks and the company's market cap is approaching $100 billion.
- The company has a nearly flawless balance sheet (more than $6 billion in net cash) and generates a staggering return on both assets (24%) and invested capital (40%).
- Combined with projected earnings growth in the mid-teens, MasterCard warrants a hugely premium multiple and remains undervalued by approximately 20%.
- MasterCard is an investor in a Canadian startup called Bionym.
- Bionym has persistent secure identification technology based on heart rhythms.
- MasterCard and Royal Bank are testing a prototype now.
- MasterCard's broadening technology base and willingness to test new concepts make it the vehicle of choice in the payments space.
- The stock appears to be fairly valued on 2015 earnings estimates and earnings growth expectations.
- The stock sports a tiny dividend but has a lot of room to grow it.
- For my IRA I'm looking for something which is undervalued or has a pretty good dividend, and MasterCard doesn't offer either of those options right now.
Update: MasterCard's Q3 Demonstrates Why It's A Favorite Growth Stock
- MasterCard posted revenue and earnings in Q3 that blew away analyst expectations.
- MasterCard continues to demonstrate the power of a business model that is leveraged to consumer credit transactions.
- I own MasterCard stock for my growth portfolio which was acquired in 2012, and which I don't intend to ever sell again.
MasterCard's Q3 Earnings Beat Has Sent Shares Higher, Should You Buy Now?
- Q3 earnings were announced before the market opened on October 30.
- The results surpassed analysts' expectations.
- The company reported more than $1.3 billion in free cash flow.
- The stock has responded by moving higher.
- The whisper number is $0.78, in line with the analysts' estimate.
- MasterCard has an 85% positive surprise history (having topped the whisper in 28 of the 33 earnings reports for which we have data).
- The overall average post earnings price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
- Visa and MasterCard both play a vital role in the payments ecosystem and get paid handsomely to do so while bearing little risk.
- They are both wonderful businesses that benefit from a durable competitive advantage in the form of embedded ecosystem integration and universal acceptance coupled with strong consumer brand recognition.
- They both also benefit from a secular shift to card-based/digital/mobile payments, strong economics, high operating leverage and a natural index to inflation.
- There are risks/considerations to both businesses that include pricing power degradation, customer concentration, competition from China UnionPay, new digital payment technologies, potential disintermediation and also lawsuits.
- MasterCard trades at a ~23% discount to fair value at current prices near ~$71 and thus provides a bit more upside than Visa.
Will The Growing Popularity And Security Of Credit Cards Lead Visa And MasterCard To Beat Earnings?Joey Solitro • Fri, Oct. 17
- Visa is scheduled to release Q4 results on October 29.
- MasterCard is scheduled to release Q3 results on October 30.
- Analysts currently expect both to report substantial growth.
- Both stocks have fallen year-to-date.
MasterCard's International Growth Can Drive The Stock To New Highs Next Year
- MasterCard's credit card transactions accounted for 14.4% of total merchant transactions in 2013 (12.2% for debit cards).
- Shares of MA are down over 14% year to date.
- 85% of global payments are still via cash or check.
MasterCard's Stock Price Will Continue To Increase
- Data for the past three months reveals share prices have not gone above $78.32 or lower than $73.40.
- Despite the fact that the company reported a 13% increase in its net revenue at $8.3 billion, the figure fell short of what was actually expected by the company.
- According to these analysts, 12 month price targets for the company have a median price of $90, a high estimate of $100 and a low estimate of $79.
Will MasterCard Suffer Financially From The Latest EU Ruling?
- The highest court in Europe ruled in favor of the European Commission's judgment passed in 2007 to ban cross-border fees charged by MasterCard Inc.
- The decision is significant because it will regulate how MasterCard carries out its business in Europe, and for more reasons explained below.
- There is potential threat to MasterCard from retailers like Target, Wal-Mart, Debenhams and Next, who are pressing for reductions in interbank rates domestically.
- The shares for MasterCard have received a consensus rating of "Buy" from 23 brokerages analyzing the company.
- Mastercard qualifies as an investment for Enterprising Investors, but not for Defensive Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is fairly valued at the present time.
- The market is implying 11.92% earnings growth over the next 7-10 years.
- MasterCard has strong barriers to entry and deep network advantages which generate strong returns on equity.
- The company has experienced very strong rates of revenue and free cash flow growth.
- MasterCard's growth drivers going forward are positive, and the company remains one of my favorite growth stocks.
Update: Visa And MasterCard Provide Tokenization For Apple Pay
- Payment tokenization is likely to be a significant growth driver for Visa going forward.
- Visa and MasterCard have strong solutions and first-mover advantage for tokenization.
- Visa and MasterCard are providing tokenization solutions for Apple's Apple Pay payment service.
Long-Term Investors Should Go Shopping With MasterCard
- MasterCard's strong brand is among the most recognized in the world.
- The company generates double-digit growth with a highly profitable business model.
- Over the last decade, free cash flow has grown strongly from $266 million to $3.5 billion.
Visa And MasterCard Should Issue Debt To Fund Massive Stock Buybacks
- Both V & MA currently have very little debt on their balance sheets.
- The stability of V and MA earnings make them good candidates for increased levels of leverage.
- Shareholders are currently missing out on potential benefits of leverage.
Is MasterCard Relatively Overvalued? See What The Levered Returns Community Thinks
- Will MasterCard continue to trade at a 16.3x EV/LTM EBITDA multiple?
- MasterCard's operating segments highlight important growth drivers.
- My assumptions in the Levered Returns valuation models yield a fair value per share of approximately $72, below its August 26th closing price of $77.00.
- The company’s latest financial results for the second quarter of 2014 reveal significant growth.
- MasterCard has managed to process over 20 billion transactions.
- MasterCard generates a significant portion of its earnings via its international transactions.
- Visa is the focus of this article, with the company’s profitability, growth potential and income prospects discussed.
- We also compare it to a key sub-industry peer and find that it could be relatively overvalued.
- As such, we think that Visa could underperform its rival going forward.
Yesterday, 1:27 PM
- Monitise (OTCPK:MONIF) gets a £49.2M investment from strategic partners Telefonica (NYSE:TEF), Santander (NYSE:SAN) and Mastercard (NYSE:MA).
- They will buy 161M ordinary shares at 30.5p/share (Nov. 26's close), representing 8.2% of the existing issued ordinary share capital.
- Monitise also says it's in discussions to expand its commercial relationships with above partners "to support the development and accelerated rollout of its global platform capabilities."
- IBM has agreed to deploy Watson in support of Monitise’s new technology platform.
- Monitise also reiterates current year and longer-term guidance.
- Short interest is ~11% of float.
- Monitise was best performer on FTSE AIM 100 index today.
- Source: press release
Fri, Oct. 31, 8:35 AM
- American Express (NYSE:AXP) looks set to escape the full force of the new measures, reports Bloomberg, as it would only have to comply with the fee caps when it works with other companies to issue cards.
- The proposal being circulated would cap interchange fees on cross-border debit-card payments at 0.2% and credit-cards at 0.3%. For domestic debit-card payments, the plan gives nations the options of calculating the 0.2% cap against the value of individual transactions, or against the "annual average transaction value."
- According to the proposal, AmEx and other three-party systems would be affected only when they have licensing agreements with other providers - a model accounting for about 9% of the firm's business, according to EU data.
Thu, Oct. 30, 8:38 AM| Comment!
Thu, Oct. 30, 8:02 AM
Thu, Oct. 30, 3:30 AM
- Visa (NYSE:V) and MasterCard (NYSE:MA) welcomed Beijing's new plan to open up its market for clearing domestic bank card transactions, following the approval from China's State Council.
- The move marks the the latest step taken by China this year to open up its financial markets. In August, the Chinese cabinet said it was freeing up the domestic courier market, allowing companies such as FedEx and UPS to establish independent courier operations.
Wed, Oct. 29, 5:50 PM
- Visa (NYSE:V) is guiding for low-double digit FY15 (ends Sep. '15) constant dollar revenue growth, with forex having a 200 bps negative impact; consensus (based on real dollars) is for 10.2% growth. Free cash flow is expected to be above $6B.
- Op. margin is forecast to be in the mid-60s range; its was at 64% in FY14, and 61% in FY13. Client incentives are expected to equal 17.5%-18.5% of gross revenue, up from FY14 16.9%.
- FQ4 payments volume +11% Y/Y to $1.2T; cross-border volume +10%; processed transactions +9% to 16.9B.
- Service revenue +8% to $1.5B; data processing +14% to $1.3B; international +4% to $938M; everything else +16% to $212M.
- MasterCard (NYSE:MA) is getting a lift from Visa's numbers.
- FQ4 results, buyback, PR
Mon, Oct. 27, 4:59 AM
- Rite Aid (NYSE:RAD) and CVS (NYSE:CVS) have disabled Apple's (NASDAQ:AAPL) mobile wallet system, Apple Pay, from working in their outlets across the U.S.
- The reason wasn't immediately clear, the NYT reports, although it might have something to do with the drug retailers being part of MCX, a consortium of merchants that is developing an unfinished rival product called CurrentC.
- A major question is whether other MCX retailers, which include Best Buy (NYSE:BBY), Gap (NYSE:GPS) and Walmart (NYSE:WMT), will also cut Apple, and/or whether consumers would revolt at such a move.
- Apple has been working with MasterCard (NYSE:MA) on its system.
Tue, Oct. 14, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Thu, Oct. 2, 9:21 AM| 4 Comments
Wed, Oct. 1, 8:18 AM
- Costco's (NASDAQ:COST) agreement with American Express for its Canadian stores is coming to an end on January, and Mastercard (NYSE:MA) will replace AmEx as the sole credit-card network accepted, and Capital One (NYSE:COF) as the exclusive card issuer.
- All new and existing Costco members will have the opportunity to apply for a new Capital One Platinum MasterCard which will double as a Costco membership card.
- Press release
- Previously: Costco to end American Express relationship in Canada
Tue, Sep. 16, 2:35 PM
Tue, Sep. 16, 7:03 AM
Thu, Sep. 11, 4:59 AM| 1 Comment
Wed, Sep. 10, 6:39 AM
- Though Visa (NYSE:V) and MasterCard (NYSE:MA) are likely to only see a "modest" revenue boost as a result of their partnership with Apple's new payment system, the new service is an excellent defensive play against getting shut out of mobile payments, reasons Philip Van Doorn.
- Analysts think that if Apple Pay is successful it could reduce the odds of eBay or the Merchant Customer Exchange coming up with a truly disruptive payments system outside of the U.S. card network.
Tue, Sep. 2, 3:48 PM
- Home Depot (HD -2.4%) confirms it's looking into "unusual activity" as it works with law enforcement officials in relation to a possible loss of customer credit card and debit card information.
- Early reports indicate the breach occurred in late April and could involve over 2K Home Depot stores.
- Shares of Home Depot have recouped a bit from their initial slide after the breach report broke. Some retail analysts called the peeling off of $3.5B in market cap somewhat overdone.
- What to watch: If the breach is as large as some banks are reporting, an increased push by the industry toward the adoption of smart card technology could be on the way.
- Related EMV stocks: PAY, NCR, MA, V, OTCQX:IFNNY, NXPI,
Tue, Sep. 2, 4:19 AM
- Apple (NASDAQ:AAPL) is planning a new partnership with major payment networks, including Visa (NYSE:V), MasterCard (NYSE:MA) and American Express (NYSE:AXP) to transform the next iPhone into a mobile wallet, Bloomberg reports.
- The announcement follows earlier reports that the iPhone 6 will feature NFC and support a mobile payments platform.
- Along with a fingerprint recognition reader that debuted on the most recent iPhone, the NFC enabled device will be able to ensure secure payments.
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