Tuesday, February 2, 2010

MasterCard Inc. (NYSE: MA): Q4 Earnings Preview 2009

MasterCard Inc. (NYSE: MA) is scheduled to release fourth quarter 2009 earnings on Thursday, February 4, 2010. Analysts, on average, expect the company to report earnings of $2.46 a share on revenue of $1.30 billion. In the year ago quarter, the company reported earnings of $1.87 per share on revenue of $1.22 billion. The credit card and transactions services company has beaten estimates by large margins for four straight quarters.
MasterCard Incorporated, together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers cheque programs.
In the preceding third quarter the Purchase, New York-based company posted a profit of $452.20 million or $3.45 per share, compared to net loss of $193.58 million or $1.48 per share in the year-ago period. Excluding special items, net income for the quarter was $456 million or $3.48 per share, up from $322 million or $2.46 per share in the prior-year quarter. Revenue rose 2% to $1.36 billion, from $1.34 billion in the prior-year quarter. Analysts, on average, expected the company to report earnings of $2.94 per share on revenue of $1.35 billion.
MasterCard saw a 7.6% year-on-year increase in the number of transactions processed, to 5.8 billion. As of September 30, 2009, the company's financial-institution customers had issued 964 million MasterCard cards, comparable to 963 million MasterCard cards issued at September 30, 2008.
In November, MasterCard repeated a warning that revenue growth in 2009 will fall short of its long-term objective of an average increase in net revenue of 12% to 15% through 2011. The company expects earnings to increase 20% in 2009, excluding severance charges.
MasterCard managed to escape relatively unscathed from the worst consequences of the global recession as credit-card networks are largely insulated from rising defaults because they process transactions and don’t make loans to cardholders. It has also benefited from secular shift from cash to electronic payments, strong holiday season and the cost-cutting initiatives that the company initiated last year. "The worst is behind us," Tim Murphy, MasterCard's head of core products, said last month at a financial-services conference in New York. U.S. retailers largely experienced a strong finish to the 2009 holiday season even though sales fell at apparel chains and department stores in December, according to MasterCard Advisors' SpendingPulse.
The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 18.66 and PEG Ratio (5 yr expected) of 1.19. In terms of stock performance, Mastercard shares have gained 83 percent over the past year.

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