MA - Mastercard Inc - ROE of 27% is nearly double the industry’s average of 14%

Mastercard Incorporated (MA) is Zacks #1 (Strong Buy) company that is trading near a 52-week high after announcing an outstanding first quarter. Wall Street responded to the company’s stellar results buy hiking earnings forecasts. Mastercard’s ROE of 27% is nearly double the industry’s average of 14%. MA’s net profit margin of 26.7% crushes the industry’s average of 4.8%.

Full Analysis

As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes more than 18 billion transactions each year, and provides analysis as well as consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro(R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories.

Strong Growth

The Zacks #1 (Strong Buy) company is trading near a 52-week high after announcing an outstanding first quarter. Mastercard’s profit more than doubled thanks to more customers abroad using the company’s credit and debit cards. Net revenue totaled $1.2 billion, a 29.2% increase over the year-prior result. Cardholders in U.S. also increased their use of the company’s cards but at a more moderate pace.

"MasterCard continues to see growth in the U.S. region despite continued economic uncertainty," Robert W. Selander stated. "In this challenging economic environment, we are working closely with our customers to deliver the value and insights they have come to expect to help them meet their business objectives. We are committed to accelerating the global expansion of electronic payments, and are making investments to ensure we are properly aligned with our customers and merchants wherever they do business," said Selander.

Wall Street responded to the company’s stellar results buy hiking earnings forecasts. Twelve out of 20 covering analysts have full-year 2008 estimates pegged at $8.21 per share, which is nice boost from last week’s $7.57. The most accurate projection is even more bullish at $8.58.

Industry Comparisons

Mastercard’s earnings per share are expected to grow by 20% over the next 3 – 5 years, topping the industry average of 16%. The company’s ROE of 27% is nearly double the industry’s average of 14%. MasterCard’s net profit margin of 26.7% crushes the industry’s average of 4.8%.

Income

The company is yielding 0.3% as it operates in a space that is not known as a dividend paying industry.

Content Courtesy: Zacks Investment Research

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