Mastercard Incorporated (MA) presents a compelling investment opportunity due to several positive factors. The company’s strong consumer spending, particularly in the travel sector, its wide range of services, growth in cross-border volume, and expansion into new geographic markets contribute to its potential for growth. Over the past year, MA stock has outperformed the industry, gaining 28.9% compared to the industry’s 16.8% growth1.
Mastercard, with a market capitalization of $391.6 billion, is a global leader in payment solutions. It offers credit, debit, mobile, web-based, and contactless payment services to financial institutions and other entities1.
Considering these positive prospects, it is worth holding on to MA stock at the moment. The Zacks Consensus Estimate for Mastercard’s 2023 earnings shows a projected 13.9% increase from the previous year. The estimate has remained stable over the past week1. In addition, MA has consistently beaten earnings estimates in the last four quarters, with an average beat of 3.2%1.
Positive Trend in Revenues
The consensus estimate for Mastercard’s 2023 revenues is $25.2 billion, indicating a 13.3% rise from the previous year. This growth is driven by increasing Payments Network Net Revenues and Value-added Services and Solutions Net Revenues1.
Furthermore, MA’s Payments Network Net Revenue is expected to increase by nearly 13% year over year, and Value-added Services and Solutions Net Revenues are projected to rise by 13.6%1. These growth drivers, along with rising transactions and gross dollar volume, position Mastercard well for long-term success1.
Strategic Alliances and Partnerships
Mastercard’s focus on expanding its operations in growing regions and forming strategic alliances and partnerships is another key factor contributing to its growth. Recent partnerships include collaborations with HealthLock, pan-European Commercial Bank, UniCredit, Canada-based fintech Nuvei, and Zanzibar e-Government Agency, among others1.
The company’s commitment to product updates and launching innovative products also attracts more users to its network. For example, it introduced the ALT ID solution for seamless and secure guest checkout transactions in India. Additionally, MA partnered with Checkout.com and Careem to facilitate hassle-free money transfers in the UAE1.
Key Considerations
While Mastercard (MA) has numerous growth drivers, investors should be aware of potential challenges. Rising expenses and high rebates and incentives can affect the company’s margins. Additionally, growing competition in the payment market, particularly through alternative credit card processing networks, may impact MA’s growth trajectory. However, with a well-planned strategic approach, Mastercard can overcome these challenges and continue to achieve long-term growth1.
Other Investment Options
Investors looking for alternative stocks in the Business Services sector may consider Paysafe Limited (PSFE), PagSeguro Digital Ltd. (PAGS), and FirstCash Holdings, Inc. (FCFS). Paysafe currently holds a Zacks Rank #1 (Strong Buy), while PagSeguro and FirstCash have a Zacks Rank #2 (Buy)1.
To conclude, Mastercard (MA) stock offers a promising investment opportunity due to its strong performance, growth prospects, and strategic initiatives. By considering these factors, investors can make informed decisions about their investment portfolio.
Disclaimer: The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
Sources:
- Mastercard Incorporated (MA) stock analysis – Zacks.com
