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What to Expect from Mastercard Moving Forward

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Nov. 20 2020, Updated 3:41 p.m. ET

Earnings expectations

Wall Street analysts expect Mastercard (MA) to post earnings per share (or EPS) of $1.25 for 1Q18, which reflects a rise on a sequential basis. In 4Q17, the company posted $1.14. This rise is expected mainly because of the efforts that the company is making to support digital transactions. The company’s efforts are reflected in its recent acquisition of Oltio.

Mastercard’s acquisition of Oltio could help the company bridge the gap between cash transactions and digital transactions. On the other hand, competitor (XLF) Visa (V) is acquiring Fraedom, which could help the company’s business-to-business payments.

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Revenues expectations

For 1Q18, Wall Street analysts have given an average estimate of $3.3 billion in revenues for Mastercard, which reflects the rise in revenues generated in 1Q17. This rise in the revenues is expected because of the favorable momentum in cross-border volumes, switched transactions, as well as gross dollar volumes. However, acquisitions could also contribute. Another factor that could positively impact Mastercard’s results moving forward is its smartphone payment initiatives.

While Mastercard’s earnings before interest, tax, depreciation, and amortization (or EBITDA) margin stood at 59.5% on an LTM (last-12-month) basis, peers like Fitbit (FIT), Worldpay (WP), and Total System Services (TSS) have EBITDA margins of -11.0%, 24.0%, and 23.5%, respectively, on a last-12-month basis.

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