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MasterCard (MA) Gains As Market Dips: What You Should Know

Zacks Equity Research
Avangrid (AGR) delivered earnings and revenue surprises of -17.50% and 3.74%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

MasterCard (MA) closed at $263.89 in the latest trading session, marking a +0.09% move from the prior day. This change outpaced the S&P 500's 0.2% loss on the day. Elsewhere, the Dow lost 0.17%, while the tech-heavy Nasdaq lost 0.38%.

Prior to today's trading, shares of the processor of debit and credit card payments had gained 7.2% over the past month. This has outpaced the Business Services sector's gain of 4.38% and the S&P 500's gain of 0.33% in that time.

Wall Street will be looking for positivity from MA as it approaches its next earnings report date. On that day, MA is projected to report earnings of $1.82 per share, which would represent year-over-year growth of 9.64%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.10 billion, up 11.81% from the year-ago period.

MA's full-year Zacks Consensus Estimates are calling for earnings of $7.60 per share and revenue of $16.78 billion. These results would represent year-over-year changes of +17.1% and +12.22%, respectively.

Any recent changes to analyst estimates for MA should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.01% 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 34.68. For comparison, its industry has an average Forward P/E of 22.85, which means MA is trading at a premium to the group.

It is also worth noting that MA currently has a PEG ratio of 2.09. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Financial Transaction Services stocks are, on average, holding a PEG ratio of 1.92 based on yesterday's closing prices.

The Financial Transaction Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 48, which puts it in the top 19% 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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