MasterCard Is Expected to Post Marginal Growth in 2016



Growth story

MasterCard (MA) stock has risen 4.8% over the past month. Visa (V), its major competitor, rose 1.6%. MasterCard is expected to report EPS (earnings per share) of $0.85 in the March quarter compared to $0.79 in the December quarter. For 2016, MasterCard is expected to earn $3.53 per share.

The company has benefited from strong operating performance with higher spending in the United States and Asia, partially offset by a strong US dollar.

Article continues below advertisement

MasterCard is forming partnerships with companies such as Apple (AAPL) to take advantage of the increasing use of mobile phones to make credit card payments. But the company’s performance is suffering from a strong US dollar. The dollar is expected to strengthen further after the Fed’s interest rate hike in December.

In 4Q15, MasterCard posted net income of $890 million, or $0.79 per share, beating analyst estimates of $0.70 per share. Its revenues increased by 4.3% to $2.5 billion, and expenses rose by 1.2% to $1.4 billion.

Here’s how some of MasterCard’s peers in the payment processing industry fared with their respective quarterly earnings:

  • Visa (V) – missed estimates
  • American Express (AXP) – missed estimates by 5%
  • Fidelity National Information Services (FIS) – missed estimates

Together, these companies account for 2.3% of the Technology Select Sector SPDR ETF (XLK).

Financial services

MasterCard is a technology company in the global payments industry. The company operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments, and businesses in more than 210 countries and territories.

MasterCard focuses on segments, including government programs such as Social Security payments, unemployment benefits, and commercial programs such as payroll, health savings accounts, and employee benefits.

In the next part of this series, we’ll look at MasterCard’s dollar volumes.


More From Market Realist