On Dec 2, we updated our research report on the payment processor MasterCard Incorporated MA.
The company is the one of the world's largest payment solutions providers to over 38 million merchants around the globe.
Approximately 40% of MasterCard's total revenue is generated in the United States, a market which is expected to grow over the next several years, due largely to the continued shift from cash/check to plastic.
The company is steadily growing in the co-brand space. In this regard, it announced deals with JetBlue in the United States as well as a number of international partners, including CITS, the largest travel company in China.
MasterCard generates 60% of its revenues from international regions, including the Asia-Pacific, Canada, Europe, Latin America, Africa and the Middle East – we believe these markets in aggregate can generate double-digit growth over the next several years, driven by consumer spending and the shift to cards. However, this exposure to international operations has caused the company’s earnings to suffer from the strengthening of the U.S. dollar. Results this year have been adversely impacted on this account and are expected to remain volatile over the coming quarters.
The company also faces headwinds from litigation risks relating to anti-trust and unfair competition which could lead to an unfavorable outcome and potential payments of damages and settlements.
The termination of the USAA Bank partnership, integration of acquisitions, higher rebates and incentives are other factors which can suppress earnings over the next few quarters.
MasterCard carries a Zacks Rank #3 (Hold). Some better-ranked stocks are Heartland Payment Systems, Inc. HPY, Fiserv, Inc. FISV and Total System Services, Inc. TSS. Each of these stocks carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment