What To Expect From MasterCard’s Q1 Earnings

by Trefis Team
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Downside
241
Market
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Trefis
MA
MasterCard
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MasterCard (NYSE: MA) had a fairly strong 2017, as the company managed to grow its revenue, net of client incentives, by 16% and its stock price increased by over 50% over the year. The company grew its revenue across streams, with the strongest growth coming from transaction fees, which increased by 20%. We expect the company to report another strong set of quarterly results on May 2.

Our price estimate for MasterCard’s stock stands at $150, which is below the market price. We have created an interactive dashboard which shows our forecasts and estimates for the company going forward; you can modify the key value drivers to see how they impact the company’s revenues, bottom line, and valuation.

Over the last several years, MasterCard has been spending heavily on marketing and promotions and rebates for customers, in order to bring in more partners into its payment network. We expect it will realize the benefits of these efforts over the next few years, and as a result, much of its overall revenue growth will likely come from growth in transaction fees.

MasterCard has been focused on growing its portfolio of co-branding partners and improving its technology to keep pace with the rapidly evolving payments space. Recent deals with PayPal, Bank of America, Santander, and Banque Travelex, among others, should help the company continue growing at a strong rate going forward.  Credit card customers increasingly prioritize security and ease of use over reward points, and the company’s focus in this direction as it integrates the capabilities of NuData Security suggests an improved growth outlook. We expect MasterCard’s expenditures on sales and marketing, and client incentives to grow slower, and consequently, drive operating margins.

 

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