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What's in Store for Mastercard (MA) This Earnings Season?

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Mastercard Inc. MA is set to release first-quarter 2021 earnings on Apr 29, before market open.

In the last reported quarter, the company’s earnings of $1.64 per share beat the Zacks Consensus Estimate by 8.6%. However, the bottom line declined 16% year over year due to weak cross-border business.

Factors Impacting Q1 Results

We expect muted revenues in the first quarter as growth in U.S business is likely to have been offset by soft cross-border business.

Gross dollar volumes, representing the aggregated dollar amount of purchases, are likely to have been adversely impacted by the pandemic. U.S. GDV is expected to have gone up, driven by higher spending via debit cards, partly offset by lower spending via credit cards.

Outside the United States, volumes are likely to have been lackluster due to COVID-led decline in spending. The Zacks Consensus Estimate for gross dollar volume is pegged at $1.65 trillion, indicating 5.7% growth from the year-ago quarter’s reported figure.

The company is likely to report a modest increase in Switched Volume, which includes transactions it authorized, cleared and settled. In the United States, Switched Volumes are expected to have been positively impacted by higher spending levels, fuelled by the fiscal stimulus.

We are also likely to see an increase in Switched Transactions (defined as the number of transactions initiated and switched through the company’s network during the period) in the upcoming quarterly results. The metric is likely to have gained partly from the rapid adoption of contactless payments by customers

On the flip side, cross-border volumes are likely to have been under pressure as growth in card not present cross-border volumes excluding online travel-related spend might have been offset by lower volumes in card present and travel-related card not present volumes.

Other revenues are likely to have increased, driven primarily by the company’s Cyber & Intelligence and Data & Services solutions.

Share repurchases during the quarter might have provided a cushion to the company’s bottom line.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Mastercard’s first-quarter earnings of $1.58 per share indicates a 13.66% decline from the prior-year period’s reported number. Likewise, the consensus estimate for sales of $3.98 billion suggests a 0.66% decrease from the year-ago quarter’s reported figure.

Earnings Surprise History

The company boasts an attractive earnings surprise track. Its bottom line beat estimates in three of the last four quarters (missed in one), the average beat being 7.56%. This is depicted in the chart below:

Mastercard Incorporated Price and EPS Surprise

Mastercard Incorporated Price and EPS Surprise
Mastercard Incorporated Price and EPS Surprise

Mastercard Incorporated price-eps-surprise | Mastercard Incorporated Quote

Here is what our quantitative model predicts:

Our proven model does not predict an earnings beat for Mastercard this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Mastercard has an Earnings ESP of -1.97%.

Zacks Rank: Mastercard currently has a Zacks Rank #3.

Stocks to Consider

Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:

EVO Payments, Inc. EVOP has an Earnings ESP of +12.64% and is presently Zacks #3 Ranked.

Intercorp Financial Services Inc. IFS has an Earnings ESP of +6.77% and a Zacks Rank of 1, presently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Oportun Financial Corporation OPRT has an Earnings ESP of +60.00% and a Zacks Rank #2 at present.

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Mastercard Incorporated (MA) : Free Stock Analysis Report

EVO Payments, Inc. (EVOP) : Free Stock Analysis Report

Oportun Financial Corporation (OPRT) : Free Stock Analysis Report

Intercorp Financial Services Inc. (IFS) : Free Stock Analysis Report

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