MasterCard: Volume Growth Drives Earnings Beat in Q2
MasterCard Incorporated MA reported earnings of 96 cents surpassing the Zacks Consensus Estimate of 90 cents per share. Earnings were up 13% year over year.
Mastercard Inc. (MA) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany
MasterCard posted revenues of $2.69 billion, which beat the Zacks Consensus Estimate of $2.6 billion. On a year-over-year basis, revenues increased 13%. Adjusted for currency, net revenue climbed 14% year over year.
The upside was primarily driven by a 14% rise in the number of processed transactions to 13.7 billion along with a 10% 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 9% year over year – on a constant currency basis – to $897 billion. As of Jun 30, 2016, MasterCard issued 2.3 billion MasterCard and Maestro branded cards.
MasterCard witnessed a year-over-year increase of 15%, or 17% on currency adjusted basis, in total operating expense to $1.3 billion due to continued investments in strategic initiatives, as well as higher legal costs.
Operating income was $1.4 billion in the reported quarter, up 13%, or 15% on currency adjusted basis. Interest expenses increased to $22 million from $17 million in the prior-year quarter.
MasterCard’s effective tax rate in the quarter was 27.9% compared with 25.8% 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.
The company’s operating margin came in at 55.2%.
Financial Update
As of Jun 30, 2016, MasterCard’s cash and cash equivalents decreased to $.2 billion from $5.7 billion at year-end 2015. Long-term debt rose to $3.31 billion from $3.27 billion as of Dec 31, 2015. Total equity declined to $5.9 billion from $6.1 billion on Dec 2015.
Share Repurchase Update
During the reported quarter, MasterCard repurchased around 5 million shares of Class A common stock worth almost $462 million. Subsequent to the first quarter to date, the company hasn’t bought back any more shares. The company is now left with shares worth $2.7 billion under its buyback authorization.
MASTERCARD INC Price, Consensus and EPS Surprise
MASTERCARD INC Price, Consensus and EPS Surprise | MASTERCARD INC Quote
Zacks Rank and Performance of Other Financial Transaction Service Providers
MasterCard currently carries a Zacks Rank #3 (Hold). Some other financial transaction service providers have also released their earnings results. The bottom lines at Visa Inc. V, American Express Co. AXP and Total System Services, Inc. TSS have surpassed their Zacks Consensus Estimate.
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