Mastercard Stock: A Case Of The Rich Getting Richer

Dec. 06, 2022 5:35 PM ETMastercard Incorporated (MA)V9 Comments
Acutel profile picture
Acutel
920 Followers

Summary

  • Although Mastercard sports a rich valuation, investors looking to buy should pull the trigger rather than wait for a lower entry point.
  • After doubling its revenue and net income since 2017, the business looks set to continue growing on the continued transition to cashless payments globally.
  • The stock has outperformed the S&P 500 by as much as 3 times in the past five years and is likely to continue doing so, thanks to business performance.
  • Mastercard is generating high levels of cash, has low debt levels, pays a generous dividend and is aggressively buying back stock.
  • Its high P/E reflects its strong earnings potential and it is likely that the stock will get more expensive and reward investors who pay the justified premium today in my opinion.

Mastercard credit cards on the keyboard

istanbulimage

Mastercard Incorporated (NYSE:MA) is a pricey stock that trades at a rich P/E ('FWD') of 35.41x vs the S&P 500’s P/E ('FWD') of 19.78x. A stock usually trades at a high multiple for one of two possible reasons: either investors' expectations are too lofty

MA and V both enjoy high margins typical of the duopolistic industry

MA and V both enjoy high margins typical of the duopolistic industry (Seeking Alpha)

MA’s 5 year return is almost 3x the S&P 500’s

MA’s 5 year return is almost 3x the S&P 500’s (Seeking Alpha)

Global cash transactions could reduce to 10% by 2025

Global cash transactions could reduce to 10% by 2025 (FIS)

MA is aggressively buying back its stock

MA is aggressively buying back its stock (MA 10Q)

This article was written by

Acutel profile picture
920 Followers
We are global investors who invest in good companies at fair valuation and speculate on all else, subject to the risk exposure we can afford

Disclosure: I/we have a beneficial long position in the shares of V either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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