Mastercard Inc., the world’s second-largest credit card network, reported its fiscal Q4 2022 earnings on January 26, 2023, beating consensus analyst estimates with earnings-per-share (EPS) profits of $2.65. Despite a sequential quarter-over-quarter (QoQ) decline in cross-border volume growth, CEO Michael Miebach stated that consumer spending remains “remarkably resilient” and that the company is well prepared to adjust investments quickly if needed.
However, the company’s positive results may be limited by the Biden-Harris Administration’s recently proposed Junk Fee Prevention Act, which aims to eliminate excessive fees, including late fees on credit cards, early termination fees for TV, phone, and internet services, and surprise resort and destination fees for hotel chains. These fees are estimated to cost American consumers billions of dollars annually.
The weekly candlestick chart for Mastercard Inc. (NYE:MA) shows a classic cup and handle breakout. The stock’s recent performance indicates that shares may reach a swing high of $385, but pullback support levels are currently at $350.14 and $341.47.
In conclusion, Mastercard’s Q4 2022 earnings indicate resilience in consumer spending despite macroeconomic and geopolitical uncertainty. However, the impact of the proposed Junk Fee Prevention Act may limit the company’s upside growth in the future.
Mastercard Inc Stock Analysis:
According to 32 analysts, the average target price of Mastercard Inc. is USD 410.13 for the next 12 months. It has been given a rating of Strong Buy. Stock Target Advisor’s own analysis of the company is Neutral, with 8 positive signals and 7 negative signals. Last closing, the stock was priced at USD 373.91. Over the past week, it has changed by -0.12%, +22.14% in the past month, and -2.17% since last year.
What we like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Superior risk adjusted returns
This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.
The stock’s annual returns have been stable and consistent compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Although stability is good, also keep in mind it can limit returns.
Superior return on equity
The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
Positive free cash flow
The company had positive total free cash flow in the most recent four quarters.
What we don’t like:
Below median total returns
The company has under performed its peers on annual average total returns in the past 5 years.
Below median dividend returns
The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.
Overpriced compared to earnings
The stock is trading high compared to its peers on a price to earning basis and is above the sector median.
Overpriced compared to book value
The stock is trading high compared to its peers median on a price to book value basis.
Overpriced on cashflow basis
The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Poor capital utilization
The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.
Poor return on assets
The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers.
Overpriced on free cash flow basis
The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Low Earnings Growth
This stock has shown below median earnings growth in the previous 5 years compared to its sector.