Behind Mastercard’s Higher Valuations

Mastercard (MA) has a price-to-cash-flow ratio on an NTM (next-12-months) basis of ~26.2x. Among its peers, First Data Corporation (FDC), Visa (V), and Global Payments (GPN) have price-to-cash-flow ratios of ~7.3x, ~24.3x, and ~16.7x, respectively, on an NTM basis. On an average, its peers’ price-to-cash-flow ratio stood at ~16.1x.

A possible reason for Mastercard’s higher valuations could be its one-year price target of $165.00 from the current price of $151.69, which implies an increase of 8.7%. Analysts are expecting this rise mostly due to a positive view of the expanding digital economy.

Mastercard’s (MA) management sees increasing government support of digitization of the global payments industry. The company expects to see strong growth considering this long-term perspective, with increasing adoption by its partners and customers.

Mastercard has a price-to-cash-flow ratio of ~33.9x on an LTM (last-12-months) basis. Among its peers (XLF), Visa (V), First Data Corporation (FDC), and Global Payments (GPN) have price-to-cash-flow ratios of ~27.9x, ~7.5x, and ~22.4x, respectively.