Here's Why You Should Retain Mastercard (MA) Stock for Now
Mastercard Incorporated MA is well poised to grow on the back of strong consumer spending, specifically across the travel sector, enhanced services suite, growth in cross-border volume and geographic expansion. Over the past year, the stock has gained 28.9%, outperforming the industry’s 16.8% growth.
Mastercard — with a market cap of $391.6 billion — is a leading global payment solutions company that provides an array of services in support of credit, debit, mobile, web-based and contactless payments, and other related electronic payment programs to financial institutions and other entities.
Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for Mastercard’s 2023 earnings is pegged at $12.13 per share, indicating a 13.9% rise from the year-ago reported figure. The estimate remained stable over the past week. MA’s earnings beat estimates in all the last four quarters, the average being 3.2%. This is depicted in the graph below.
Mastercard Incorporated Price and EPS Surprise
Mastercard Incorporated price-eps-surprise | Mastercard Incorporated Quote
Furthermore, the consensus mark for revenues is $25.2 billion for 2023, indicating a 13.3% rise from the year-ago reported figure. Increasing Payments Network Net Revenues and Value-added Services and Solutions Net Revenues are bound to support the top-line growth.
Our estimate for Payments Network Net Revenue indicates a nearly 13% year-over-year increase. Similarly, we expect Value-added Services and Solutions Net Revenues to jump 13.6% from the year-ago reported level. Rising transactions, GDV, prudent growth strategies and strategic partnerships are likely to continue boosting MA’s performance.
We expect 2023 processed transaction volumes to jump 11.6% year over year. Further, our estimate suggests gross dollar volume or GDV to rise 9.7% year over year, backed by strength in the U.S., Europe and Latin America operations.
The company’s focus on expanding operations in growing regions positions it well for long-term growth. Also, its strategic alliances and partnerships are major positives. Some important partnerships in recent times include those with HealthLock, pan-European Commercial Bank, UniCredit, Canada-based fintech Nuvei, Zanzibar e-Government Agency, and many others.
Its focus on product updates and new innovative product launches brings more and more traffic to its network. It introduced the ALT ID solution for paving the way for seamless and secured guest checkout transactions across India. To promote hassle-free money transfers in the UAE, MA teamed up with Checkout.com and Careem. Such deals are expected to continue in the coming days.
Key Concerns
However, there are a few factors that investors should keep an eye on.
Rising expenses, high rebates and incentives are likely to drag MA's margins. In 2023, we expect adjusted operating expenses to escalate nearly 11% from the prior-year comparable period’s figure. Also, growing competition in the payment market can affect its growth trajectory. The Credit Card Competition Act’s proposed measure is expected to increase competition through the usage of alternative credit card processing networks. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Stocks to Consider
Some better-ranked stocks in the broader Business Services sector are Paysafe Limited PSFE, PagSeguro Digital Ltd. PAGS and FirstCash Holdings, Inc. FCFS. While Paysafe currently sports a Zacks Rank #1 (Strong Buy), PagSeguro and FirstCash carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Paysafe’s current year bottom line suggests 1.3% year-over-year growth. Headquartered in London, PSFE beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 154%.
The Zacks Consensus Estimate for PagSeguro’s current year bottom line suggests 13% year-over-year growth. Based in Sao Paulo, Brazil, PAGS beat earnings estimates in all the past four quarters, with an average surprise of 9.3%.
The Zacks Consensus Estimate for FirstCash’s current year earnings indicates a 6.4% year-over-year increase. Fort Worth, TX-based FCFS beat earnings estimates in all the past four quarters, with an average surprise of 7.3%.
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Mastercard Incorporated (MA) : Free Stock Analysis Report
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