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MasterCard (MA) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

MasterCard (MA) closed at $300.43 in the latest trading session, marking a -0.98% move from the prior day. This move lagged the S&P 500's daily loss of 0.71%. Elsewhere, the Dow lost 0.81%, while the tech-heavy Nasdaq lost 0.79%.

Heading into today, shares of the processor of debit and credit card payments had gained 4.67% over the past month, outpacing the Business Services sector's gain of 4.09% and lagging the S&P 500's gain of 4.77% in that time.

Investors will be hoping for strength from MA as it approaches its next earnings release, which is expected to be January 29, 2020. On that day, MA is projected to report earnings of $1.86 per share, which would represent year-over-year growth of 20%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.39 billion, up 15.42% from the year-ago period.

Investors should also note any recent changes to analyst estimates for MA. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.02% lower within the past month. MA is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, MA is currently trading at a Forward P/E ratio of 33.53. For comparison, its industry has an average Forward P/E of 21.26, which means MA is trading at a premium to the group.

Also, we should mention that MA has a PEG ratio of 2.1. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Financial Transaction Services was holding an average PEG ratio of 1.69 at yesterday's closing price.

The Financial Transaction Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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