MasterCard Hits 52-Week High On Solid Earnings, Recent Deals

On May 23, 2017, shares of the payment solutions company Mastercard Inc. (NYSE:MA) hit a 52-week high of $119.93, led by strong earnings and recent deals.

Over the past one year, shares have returned 24%, significantly outpacing the gain of 16.6% by the Zacks categorized Financial Transaction Services industry. The outperformance is reflective of the company inorganic growth, investment in technology and signing up of a number of clients, which have resulted in strong consistent operating profitability.

Investors were impressed by first-quarter 2017 earnings reported earlier during the month. While the bottom line surpassed the estimates by 7.4% and improved 17.4% year over year, the top line beat by 3.4% and was up 11.8% year over year. Results showed a 17% rise in the number of switched transactions along with a 13% increase in cross-border volumes.

The share price must also have received a boost from the acquisitions of VocaLink and NuData Security, sealed last month. Both these deals complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings.

Mastercard also renewed a number of exclusive agreements with key partners in the U.S., including Capital One, for its signature debit card business and Bank of the West for its consumer credit, debit, and small business portfolios. It also renewed consumer and commercial credit ties with Citizens Bank. The company extended its partnership with Itaú in Brazil as well. In Europe, it signed deals with AvantCard, Bank Van Breda.

Earnings and deals aside, investors positively view continued efforts made by the company to strengthen its payment security by investing in technology to drive a seamless, convenient and secure customer and make transactions safer, simpler and smarter. To this end, recently Mastercard along with Samsung (KS:005930) announced the world's first authentication technology using iris scanning to verify online purchases on a mobile phone. The scanning technology will be implemented on the Galaxy S8 later this year. Also, it recently announced the first biometric card, which combines chip technology with fingerprint scans directly on the card. This technology is being used to verify a cardholder's identity for in-store purchases at any EMV terminal. After successful trials in South Africa with a leading supermarket retailer and a bank, the company expects trials in Europe and Asia in the coming months.

Another player in the same industry Visa Inc. (NYSE:V) also hit a 52-week high on the same day. Its shares have gained 18.7% over the last one year.

Mastercard carries a Zacks Rank #3 (Hold). Some better-ranked players in the same segment are Total System Services Inc. (NYSE:TSS) and Vantiv, Inc. (NYSE:V) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Total System Fiserv (NASDAQ:FISV) beat estimates in three of the last four reported quarters, with an average positive surprise of 3.6%.

Vantiv beat estimates in three of the last four reported quarters, with an average positive surprise of 3.5%.

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