Mastercard Inc., on the up & up in difficult year

Mastercard Inc., is currently trading at $102.25 per share, up 6.19% for the year-to-date. The stock began trading at $96.29 on 1 January and has appreciated by approximately $6 since then. Over the past 3 months, the stock has appreciated by 6.19% and over the past 1 month it has appreciated by 2.27%. During the last 5 trading days, Mastercard Inc., stock is up 0.25%. At current prices the company is valued at $112.24 billion with a price/earnings ratio of 29.99. The dividend is $0.76 and the yield is 0.74%. The next earnings date is slated for 3 weeks’ time on October 28, 2016. The 52-week trading range for the stock is $95.33 on the low end and $103.49 on the high end, and the 1-year target estimate price is $111.33.

Latest news

On Thursday, 6 October 2016, Mastercard Inc., stock hit a 1-year high of $103.17 per share. Several factors have been cited for the rising stock price, including an upgrade to Masterpass, a partnership with PayPal, the acquisition of VocaLink and a deal with Stripe. Earlier last week, Mastercard expanded on an existing deal with Apple Inc. (AAPL), with Apple Pay. This contactless form of payment processing has now been introduced to Russia. During September, PayPal Holdings Inc. (PYPL), and Mastercard Inc., extended their partnership. PayPal agreed to include Mastercard as an equal payment option in the paper wallet. This will allow Mastercard to enjoy greater visibility in online transactions. Additionally, no transaction fees will be forfeited when PayPal customers link their wallets and bank accounts.

There are several other reasons why Mastercard Inc., stock has rallied of late. One of these is the $1 billion acquisition of VocaLink which is a major player in the UK ACH payments services system. Another reason for Mastercard’s recent success comes in the form of Mastercard Send. This expedited payment service offers instant payouts. Credit cards are being faced with increasing threats in the form of non-card electronic payments options. VocaLink is one such option which will allow Mastercard to rethink its business model and compete in the burgeoning non-card electronic payments market such as Venmo and PayPal. Further, a digitised solution in the form of MasterPass is available with an omni-channel payment service for consumers, card issuers and merchants. These are the major reasons why Mastercard Inc., stock is rallying, and likely to continue rallying moving forward.

What about earnings?

In Q3 2016, the estimated earnings for Mastercard Inc., came in at $0.97. In Q2 2016 the actual earnings came in at $0.96 with estimated earnings at $0.9. In Q1 2016 the actual earnings were $0.86 and the estimated earnings were $0.85. In Q4 2015, the actual earnings were $0.79 with estimates of $0.69, leading to a big positive earnings surprise. In Q3 2015, actual earnings of $0.91 were reported with estimated earnings of $0.88. For the most part, Mastercard Inc., stock has exceeded expectations with positive earnings surprises:

• For the fiscal quarter ending in September 2015 and reported on 29 October 2015, the EPS was $0.91 in the consensus EPS was $0.88. This resulted in a 3.41% earnings surprise.
• For the fiscal quarter ending in December 2015 and reported on 29 January 2016, the EPS was $0.79 and the consensus EPS was $0.68. This resulted in a 16.18% earnings surprise.
• For the fiscal quarter ending in March 2016 and reported on 28 April 2016, the EPS was $0.86 and the consensus EPS was $0.85, leading to a 1.18% earnings surprise.
• For the fiscal quarter ending in June 2016 and reported on 28 July 2016, the EPS was $0.96 and the consensus EPS was $0.90. This resulted in a 6.67% earnings surprise.

Earnings and Recommendations for Mastercard Inc.

2013, earnings of $3.12 billion were generated, while in 2014 earnings were $3.62 billion. By 2015, earnings had increased to $3.81 billion. In terms of recommendations, the overall trend since July 2016 has reflected a majority by/strong buy sentiment among investors. Of the 38 analysts polled in July, 30 of them recommended either a strong buy a buy with a minority preferring a hold or underperform rating. In October 2016, some 35 analysts were polled by Yahoo!, and 19 recommended a buy an 9 a strong buy. On a ratings scale of 1.0 (strong buy) to 5.0 (sell) Mastercard Inc., is at 2.0 – a firm buy.

Based on the above technical, fundamental and market factors, this is definitely a bullish stock. With at least one Fed rate hike expected before the end of 2016 we can expect binary options traders to go long on the stock given increased profitability projections.