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MasterCard (MA) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

MasterCard (MA) closed at $274.27 in the latest trading session, marking a +1.35% move from the prior day. This move outpaced the S&P 500's daily gain of 0.69%. Elsewhere, the Dow gained 0.22%, while the tech-heavy Nasdaq added 0.91%.

Coming into today, shares of the processor of debit and credit card payments had lost 1.91% in the past month. In that same time, the Business Services sector lost 0.85%, while the S&P 500 lost 0.61%.

Wall Street will be looking for positivity from MA as it approaches its next earnings report date. This is expected to be October 29, 2019. In that report, analysts expect MA to post earnings of $2.01 per share. This would mark year-over-year growth of 12.92%. Our most recent consensus estimate is calling for quarterly revenue of $4.42 billion, up 13.5% from the year-ago period.

MA's full-year Zacks Consensus Estimates are calling for earnings of $7.61 per share and revenue of $16.81 billion. These results would represent year-over-year changes of +17.26% and +12.42%, respectively.

It is also important to note the recent changes to analyst estimates for MA. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.03% lower. MA is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, MA is holding a Forward P/E ratio of 35.58. This represents a premium compared to its industry's average Forward P/E of 25.38.

Investors should also note that MA has a PEG ratio of 2.25 right now. 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 1.72 at yesterday's closing price.

The Financial Transaction Services industry is part of the Business Services sector. This group has a Zacks Industry Rank of 48, putting it in the top 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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