HomeMost PopularInvestingWill Mastercard's Q3 Earnings Outshine Expectations with Strong Transaction Growth?

Will Mastercard’s Q3 Earnings Outshine Expectations with Strong Transaction Growth?

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Mastercard Incorporated (MA) is set to release its third quarter 2023 earnings on October 26, and there are high expectations for a strong performance.

What Do the Estimates Say?

The Zacks Consensus Estimate for Mastercard’s third-quarter earnings is $3.21 per share, representing a 19.8% increase from the previous year. Analysts also predict a 13.4% rise in revenues to $6.5 billion.

It’s worth noting that Mastercard has consistently beaten estimates in the past four quarters, with an average surprise of 3.2%.

What the Quantitative Model Suggests

Based on our reliable model, Mastercard is likely to beat earnings expectations this quarter. The combination of a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 increases the chances of an earnings beat.

Mastercard currently has an Earnings ESP of +0.12%, indicating a higher Most Accurate Estimate than the Zacks Consensus Estimate of $3.21. This suggests a potential beat.

Factors Driving Q3 Performance

Mastercard’s third-quarter revenues are expected to be boosted by increased spending in the travel and entertainment sectors. The company’s Gross Dollar Volume (GDV) metric, which measures the value of transactions on Mastercard-branded cards, is anticipated to have seen a positive impact from increased card usage both domestically and internationally.

In addition, processed transactions are expected to have increased due to resilient consumer spending and the company’s initiatives to promote contactless payments. Cross-border volumes are also likely to have benefited from the easing of travel restrictions.

However, it is important to note that increased operating costs, higher rebates, and incentives could partially offset the positive factors mentioned above. Mastercard’s adjusted operating expenses are expected to be up 11.6% from the previous year.

Other Stocks to Watch

Aside from Mastercard, there are other companies in the Business Services sector that have the potential to beat earnings expectations this quarter:

  • FirstCash Holdings, Inc. (FCFS): Earnings ESP of +5.71% and a Zacks Rank #2
  • PagSeguro Digital Ltd. (PAGS): Earnings ESP of +1.96% and a Zacks Rank #3
  • Shift4 Payments, Inc. (FOUR): Earnings ESP of +9.38% and a Zacks Rank #3

To stay up to date with the latest earnings announcements, check out the Zacks Earnings Calendar.

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Sources: Zacks Investment Research

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