MasterCard's (MA) Volume Growth Drives Q3 Earnings Beat

MasterCard Incorporated (NYSE:MA) reported earnings of $1.08 per share, surpassing the Zacks Consensus Estimate of 98 cents. Earnings were up 19% year over year.

MasterCard posted revenues of $2.9 billion, which beat the Zacks Consensus Estimate of $2.74 billion. On a year-over-year basis, revenues increased 14%.

The upside was primarily driven by an 18% rise in the number of processed transactions to 14.5 billion along with a 12% increase in cross-border volumes. These were partially offset by higher rebates and incentives, primarily attributable to new and renewed business alliances and increased volumes.

During the reported quarter, worldwide purchase volume rose 9% year over year – on a constant currency basis – to $882 billion. As of Sep 30, 2016, 2.3 billion MasterCard and Maestro branded cards were issued.

MasterCard witnessed a year-over-year increase of 4%, or 5% on currency adjusted basis, in total operating expenses to $1.2 billion due to continued investments in strategic initiatives, as well as higher data processing costs.

Operating income was $1.7 billion in the reported quarter, up 22% year over year. Interest expenses increased to $23 million from $15 million in the prior-year quarter.

The effective tax rate in the quarter was 27.5% compared with 27.7% in the year-ago quarter.

The company delivered an operating margin of 58%.

Financial Update

As of Sep 30, 2016, the company’s cash and cash equivalents decreased to $5.21 billion from $5.75 billion at year-end 2015. Long-term debt increased to $3.33 billion from $3.27 billion as of Dec 31, 2015. Total equity increased to $6.25 billion from $6.1 billion at Dec 31, 2015.

Share Repurchase Update

During the reported quarter, MasterCard repurchased around 6 million shares of Class A common stock worth almost $591 million.

MASTERCARD INC Price, Consensus and EPS Surprise

MASTERCARD INC Price, Consensus and EPS Surprise | MASTERCARD INC Quote

Zacks Rank and Performance of Other Financial Transaction Service Providers

MasterCard currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Among the other financial transaction service providers that released their earnings results, the bottom line at Visa Inc. (NYSE:V) , American Express Co. (NYSE:AXP) and Discover Financial Services (NYSE:DFS) beat their respective Zacks Consensus Estimate.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>