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How Mastercard’s Second Quarter Could Shake Out

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May. 24 2018, Updated 10:54 p.m. ET

Expected second-quarter EPS

Wall Street analysts have given Mastercard (MA) an average EPS estimate of $1.5 for the second quarter, reflecting a year-over-year rise.

The company is expected to benefit primarily from increased digital transactions as well as from the improving US economy. Analysts have given Mastercard a high EPS estimate of $1.57 and a low EPS estimate of $1.38.

Macroeconomic factors that could negatively affect consumer spending are expected to be hurdles for consumer financial companies such as Mastercard going forward. These companies’ businesses would be positively affected by supportive measures from the government.

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Expected revenue

For the second quarter, analysts expect Mastercard’s revenue to come in at $3.6 billion. They have given the company high and low estimates of $3.7 billion and $3.4 billion, respectively. Higher oil prices along with the company’s gross dollar volumes, switched transactions, and cross-border volumes will likely be the primary drivers of its second-quarter results.

In comparison, peers (XLF) American Express (AXP), Visa (V), and Discover Financial Services (DFS) are expected to report revenues of $10.1 billion, $5.0 billion, and $2.6 billion, respectively, in the quarter.

Higher oil prices could lead to higher spending, which could help Mastercard generate higher fees, providing a boost to its net revenue. The improving US economy could also positively impact the company’s revenue, as consumer confidence tends to increase in an improving economy, resulting in higher spending.

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