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MasterCard (MA) Beats on Q1 Earnings, Revenues Estimates

MasterCard Incorporated MA reported first-quarter 2016 operating earnings per share of 86 cents that beat the Zacks Consensus Estimate of 85 cents by 1.2%. However, earnings declined 3.4% on a year-over-year basis.

MasterCard posted revenues of $2.44 billion, which beat the Zacks Consensus Estimate of $2.37 billion by 2.6%. On a year-over-year basis, revenues increased 9.7%. Adjusted for currency, net revenue soared 14% year over year.

The upside was primarily driven by a 14% rise in the number of processed transactions to 12.6 billion along with a 12% increase in cross-border volumes. These were partially offset by higher rebates and incentives, primarily attributable to new and renewed business alliances and increased volumes.

During the reported quarter, worldwide purchase volume rose 12% year over year – on a constant currency basis – to $838 billion. As of Mar 31, 2016, MasterCard issued 2.3 billion MasterCard and Maestro branded cards.

MasterCard witnessed a year-over-year increase of 24.9%, or 29% on currency adjusted basis, in total operating costs to $1.1 billion due to higher general and administrative, and depreciation and amortization expenses.

Operating income was $1.3 billion in the reported quarter, was flat year over year but up 4% on an annualized basis after adjusting for currency fluctuations. Interest expenses increased 17.6% to $20 million from $17 million in the prior-year quarter.

MasterCard’s effective tax rate in the quarter was 28.3% as against 23.9% in the year-ago quarter. The rise was primarily due to the non-recurrence of a discrete U.S. foreign tax credit benefit in the quarter.

Financial Update

As of Mar 31, 2016, the company’s cash and cash equivalents decreased 14.8% to $4.9 billion from $5.7 billion at year-end 2015. Long-term debt rose nearly 2% to $3.33 billion from $3.26 billion as of Dec 31, 2015. Total equity declined 9.1% to $5.5 billion from $6.1 billion at Dec 2015.

Share Repurchase Update

During the reported quarter, MasterCard repurchased around 15 million shares of Class A common stock worth almost $1.4 billion. Subsequent to the first quarter till date, the company spent another $288 million to buyback 3 million shares. The company is now left with shares worth $2.9 billion under its buyback authorization.

Zacks Rank and Performance of Other Financial Transaction Service Providers

MasterCard currently carries a Zacks Rank #2 (Buy). Some other financial transaction service providers too recently released their earnings results. The bottom line at Visa Inc. V, Alliance Data Systems Corp. ADS and Total System Services, Inc. TSS beat their respective Zacks Consensus Estimates in the last reported quarter.

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MASTERCARD INC (MA): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
TOTAL SYS SVC (TSS): Free Stock Analysis Report
ALLIANCE DATA (ADS): Free Stock Analysis Report
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