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

Zacks Equity Research

MasterCard (MA) closed at $278.59 in the latest trading session, marking a +1.08% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.28%. Elsewhere, the Dow gained 0.07%, while the tech-heavy Nasdaq added 0.71%.

Prior to today's trading, shares of the processor of debit and credit card payments had gained 3.3% over the past month. This has outpaced the Business Services sector's gain of 0.86% and the S&P 500's gain of 1.93% in that time.

Wall Street will be looking for positivity from MA as it approaches its next earnings report date. This is expected to be July 30, 2019. The company is expected to report EPS of $1.82, up 9.64% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.09 billion, up 11.6% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.60 per share and revenue of $16.76 billion. These totals would mark changes of +17.1% and +12.09%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for MA. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.05% lower. MA currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MA has a Forward P/E ratio of 36.26 right now. This valuation marks a premium compared to its industry's average Forward P/E of 24.55.

Meanwhile, MA's PEG ratio is currently 2.16. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Financial Transaction Services was holding an average PEG ratio of 2.06 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 59, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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