Mastercard’s stock (NYSE: MA) has gained approximately 14% YTD as compared to the 11% rise in the S&P500 index over the same period. Further, at its current price of $395 per share, it is trading 13% below its fair value of $453 – Trefis’ estimate for Mastercard’s valuation.
Interestingly, Mastercard
MA
The company outperformed the consensus estimates in the second quarter of 2023. It reported a 14% increase in the net revenues to $6.3 billion driven by a 12% rise in the gross-dollar volume, a 24% jump in the cross-border volume, and a 17% growth in the number of switched transactions. Further, the operating expenses as a % of revenues witnessed a favorable drop, benefiting the bottom line. Overall, the net income improved 25% y-o-y to $2.8 billion.
The company’s top line grew 13% y-o-y to $12 billion in the first half of FY 2023. It was because of strong growth in each of the key metrics – GDV, cross-border volume, and number of switched transactions. In addition, lower operating expenses as a % of revenues also helped the bottom line. However, the positive effect was partially offset by higher effective income tax. Altogether, the net income increased 6% y-o-y to $5.2 billion.
Moving forward, we expect the third quarter results to be on similar lines. All in all, Mastercard’s revenues are estimated to touch $25.27 billion in FY2023. Additionally, MA’s adjusted net income margin is expected to improve in the year, leading to a net income of $13.9 billion. This coupled with an annual EPS of $14.58 and a P/E multiple of just above 31x will lead to a valuation of $453.
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