It has been about a month since the last earnings report for MasterCard (MA). Shares have lost about 11.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MasterCard due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Mastercard Q4 Earnings Beat Estimates, Revenues Match
Mastercard reported fourth-quarter earnings of $1.96 per share, beating the Zacks Consensus Estimate by 4.81%. Earnings improved 26% year over year.
Better-than-expected results were primarily driven by higher switched transactions, increase in cross-border volume and gross dollar volume, and gains from acquisitions. Increase in rebates and incentives year over year was a partial dampener.
Mastercard’s revenues of $4.4 billion met the Zacks Consensus Estimate and grew 16% year over year.
Full-Year Results
The company reported earnings per share of $7.77, up 20% on revenues of $16.9 billion, up 13% year over year.
Total adjusted operating expenses rose 12% to $2 billion, due to the company’s continued investment in strategic initiatives.
Adjusted operating margin of 54.4% was up 210 basis points year over year.
Gross dollar volume increased 12% to $1.7 trillion while cross-border volumes were up 16% on a local-currency basis.
As of Dec 31, 2019, the company’s customers had issued 2.6 billion Mastercard and Maestro-branded cards.
Share Repurchase and Dividend Payout
During the reported quarter, Mastercard repurchased shares worth $1 billion and paid out $333 million in dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.9% due to these changes.
VGM Scores
At this time, MasterCard has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MasterCard has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Mastercard Incorporated (NYSE:MA
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