Mastercard Near Its 52-Week High: Is Upside Potential Still Left?



Stock price performance

Mastercard (MA) has made a remarkable run over the last one-and-a-half years. The stock traded at ~$103.00 at the beginning of 2017, and it currently trades at ~$211.00—almost double its stock price in that timeframe. The stock is currently trading near its 52-week high of $217.35, which it attained on September 4.

Year-to-date, Mastercard stock has returned ~40.0%. This is much better than the iShares US Financial Services ETF (IYG) and the SPDR S&P 500 ETF (SPY), which are up 4.8% and 7.8%, respectively.

Mastercard’s stock performance also surpassed its peers. Visa (V) rose 15.0%, PayPal Holdings (PYPL) rose 18.0%, and American Express (AXP) fell 1.5%.

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What’s driving MA stock?

Mastercard’s (MA) stock price performance can be primarily attributed to its six consecutive quarters of robust results. The company’s top and bottom lines have topped Wall Street estimates and have marked significant YoY (year-over-year) improvement. Its adjusted EPS jumped 51.0% YoY to $1.66 and beat the Wall Street estimate of $1.53.

An improving GDP growth rate, a healthy job environment, and a steady increase in wages have fueled a rise in retail spending. This spending uptrend has benefited payment processing companies such as Mastercard. The rapid adoption of digital payment solutions worldwide due to mobile and Internet penetration has also aided its growth.

What’s ahead?

Wall Street expects these factors to drive Mastercard’s revenues and EPS. For 2018, analysts expect the company to report revenues of ~$15.0 billion, signifying YoY growth of ~20.0%. Its earnings per share are expected to increase ~40.0% YoY to $6.42.

In this series, we’ll look at the factors that are driving Mastercard’s top- and bottom-line results, growth prospects, valuations, and analysts’ ratings.


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