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Behind Mastercard’s Higher Valuations

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Price-to-cash-flow ratio

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.

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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.

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