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Why MasterCard’s Earnings Could Be on the Rise

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Rising performance

MasterCard (MA) is expected to release its 2Q17 earnings report on July 24, 2017. Analysts expect the company to post EPS (or earnings per share) of $1.04 in 2Q17, a rise of around 8.3% on a YoY basis. MasterCard is expected to post revenue of $3.0 billion in 2Q17. This growth is expected on the back of increased US spending due to the availability of Masterpass by MasterCard to US Bank (USB) customers. MasterCard is expected to post EPS of $4.3 in 2017, a rise of 14.1% on a YoY basis. Although global growth has seen a modest pick-up, the company is concerned about the direction of trade policies.

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In 1Q17, MasterCard reported EPS of $1.01, which beat analysts’ estimate of $0.95. This growth is a result of solid payment volumes and penetration. This growth trajectory is also expected to continue in the upcoming quarters, as MasterCard has completed the VocaLink acquisition. This acquisition could help the company to capture new payment flows.

Competitor analysis

Although MasterCard (MA) has been beating earnings estimates recently, it does face strong competition from its peers. Visa (V) also reported strong EPS numbers in fiscal 2Q17 of $0.86, which beat analysts’ estimates on rising consumer spending and payment volumes. Some of MasterCard’s other peers have reported the following EPS:

  • American Express (AXP): $1.34, which beat estimates
  • Discover Financial Services (DFS): $1.43, which missed estimates
  • Fidelity National Information Services (FIS): $0.86, which beat estimates

These companies jointly form 0.53% of the iShares Core S&P 500 ETF (IVV).

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