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Assessing Mastercard Incorporated's (NYSE:MA) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MA's recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.
Were MA's earnings stronger than its past performances and the industry?
MA's trailing twelve-month earnings (from 31 December 2018) of US$5.9b has jumped 50% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.5%, indicating the rate at which MA is growing has accelerated. What's the driver of this growth? Well, let’s take a look at whether it is merely due to industry tailwinds, or if Mastercard has seen some company-specific growth.
In terms of returns from investment, Mastercard has invested its equity funds well leading to a 107% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 24% exceeds the US IT industry of 5.7%, indicating Mastercard has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Mastercard’s debt level, has increased over the past 3 years from 52% to 64%.
What does this mean?
Mastercard's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Mastercard has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Mastercard to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MA’s future growth? Take a look at our free research report of analyst consensus for MA’s outlook.
- Financial Health: Are MA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.