MasterCard Inc. (NYSE: MA): Q1 Earnings Preview 2011

MasterCard Inc. (NYSE: MA) is scheduled to release its first-quarter earnings before the opening bell on Tuesday, May 3, 2011. Analysts, on average, expect the company to report earnings of $4.10 per share on revenue of $1.46 billion. In the year ago quarter, the company reported earnings of $3.46 per share on revenue of $1.31 billion.

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 fourth-quarter, the Purchase, New York-based company's net income was $415 million, or $3.16 per share, compared to $294 million, or $2.24 per share, in the year-ago quarter. Revenue grew 11 percent to $1.44 billion from $1.30 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $3.04 per share on revenue of $1.42 billion.

At its last earnings call in February, MasterCard said that the U.S. economic recovery will help its revenue grow more in 2011 than it did in 2010, despite the prospect of increased U.S. regulation.

MasterCard, like other payment solutions company, is benefiting from a broad trend away from cash and checks and toward electronic forms of payment. When purchases are made using debit and credit cards carrying the MasterCard logo, the company collects fees from each transaction. That makes the company's results sensitive to consumer spending. However, unlike credit-card companies, MasterCard doesn't lend money, so it wasn't hit hard by the credit crisis. Moreover, the company is cultivating new business in emerging markets.

MasterCard has relatively few opportunities for growth in the United States, where rival Visa dominates the debit processing market and most consumers already use credit and debit cards. Moreover, uncertainty stemming from financial overhaul, which includes curbs on debit-card transaction fees, has taken some shine off MasterCard's shares.  The Federal Reserve has proposed capping interchange, or “swipe” fees, at 12 cents for each debit-card transaction, replacing a formula that costs merchants about 1 percent of the purchase price. The caps, mandated by the Dodd-Frank law that overhauled the financial industry last year, may reduce annual revenue at U.S. banks by more than $12 billion.

Among other developments, the company's board recently doubled its existing share repurchase program that was announced in September 2010. The board increased its authorization to repurchase an additional $1.0 billion of its Class A common stock in open market transactions.

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MasterCard Incorporated (NYSE: MA): Q4 Earnings Preview 2010

MasterCard Incorporated (NYSE: MA) is scheduled to release its fourth-quarter financial results before the market open on Thursday, February 3, 2011. Analysts, on average, expect the company to report earnings of $3.04 per share on revenue of $1.42 billion. In the year ago quarter, the company reported earnings of $2.24 per share on revenue of $1.30 billion.

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's net income was $518 million, or $3.94, compared to $452 million, or $3.45 per share, in the year-ago quarter. Revenue grew 4.7% to $1.42 billion from $1.36 billion. Analysts, on average, expected the company to report earnings of $3.54 per share on revenue of $1.41 billion. 

MasterCard, like other payment solutions company, is benefiting from a broad trend away from cash and checks and toward electronic forms of payment. When purchases are made using debit and credit cards carrying the MasterCard logo, the company collects fees from each transaction. That makes the company's results sensitive to consumer spending. However, unlike credit-card companies, MasterCard doesn't lend money, so it wasn't hit hard by the credit crisis.

The company is cultivating new business in emerging markets. Expanding its presence in high-growth China, MasterCard plans to enhance its partnership with China UnionPay, the state-owned company, which has the monopoly on issuing credit cards in the country, for exploring business opportunities together. . China UnionPay is the sole bank card transaction processing company in the region.UnionPay is the biggest card company globally in terms of card issuance and the second largest brand in the Asia-Pacific region in terms of transaction volume, thereby beating the oldest and globally renowned competitors such as Visa Inc. (NYSE: V).

In an effort to expand its international business, MasterCard recently obtained the naming rights of Wukesong Arena in Beijing for a five-year period. MasterCard derives nearly 60% of its revenue from overseas

The company has relatively few opportunities for growth in the United States, where rival Visa dominates the debit processing market and most consumers already use credit and debit cards. Moreover, uncertainty stemming from financial overhaul, which includes curbs on debit-card transaction fees, has taken some shine off MasterCard's shares.  Last month, the Federal Reserve proposed capping fees banks can charge merchants for debit-card transactions at 12 cents. While that directly affects bank revenues from debit cards, the banks could try to get Visa and MasterCard to lower their fees to use their networks in order to offset the revenue loss. Final recommendations on the proposal are set to be issued in April.

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MasterCard Inc. (NYSE: MA): Q1 Earnings Preview

MasterCard Incorporated (NYSE: MA) is scheduled to release its first-quarter financial results before the opening bell on Tuesday, May 4, 2010. Analysts, on average, currently expect the company to report earnings of $3.14 a share on revenue of $1.27 billion. In the year ago quarter, the company reported a earnings of $2.80 per share on revenue of $1.16 billion.

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 fourth quarter, the Purchase, New York-based company reported net income of $294.00 million or $2.24 per share for the fourth quarter, up from $239.44 million or $1.83 per share in the prior year quarter. On adjusted basis, the company earned $243 million or $1.85 per share in the fourth quarter 2009. Revenue grew 6% to $1.3 billion from $1.2 billion in the same quarter last year.

As of December 31, 2009, the company's customers had issued 966 million MasterCard cards, a decline of 1.3% over the cards issued at December 31, 2008.

MasterCard, like other payment solutions company, is benefiting from a broad trend away from cash and checks and toward electronic forms of payment. When purchases are made using debit and credit cards carrying the MasterCard logo, the company collects fees from each transaction. That makes the company's results sensitive to consumer spending. However, unlike credit-card companies, MasterCard doesn't lend money, so it wasn't hit hard by the credit crisis.

In the last four quarters, the company recorded EPS growth of 9%, 27%, 41% and finally 31% in the fourth quarter. However, a lack of revenue growth points to the fact that Mastercard manufactured the majority of its earnings growth through controlling expenses and not as a result of a material increase in the business. In fact, the last four quarters of revenue growth have been (2%), 3%, 2%, and 6%.

Looking ahead, MasterCard's performance will depend as always on consumer spending levels. On Friday, a government release showed that consumer spending grew at a 3.6% annual rate.

In terms of stock performance, MasterCard shares are down over 3% since the beginning of the year. Shares of the company closed at $248.04 on Friday.

Full Disclosure: None.

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.

Full Disclosure: None.