Mastercard (MA) AI Stock Analysis

• Market Cap: $469.92B
• Dividend Yield: 0.53%
• Average Volume (3M): 3.27M
• Price to Earnings (P/E): 37.1
• Beta (1Y): 0.81
• Revenue Growth: 12.07%
• EPS Growth: 17.27%
• Country: US
• Employees: 35,300
• Sector: Financial
• Sector Strength: 79
• Industry: Financial - Credit Services
• EPS (TTM): 13.89
• Shares Outstanding: 904,889,500
• 10 Day Avg. Volume: 3,782,386
• 30 Day Avg. Volume: 3,273,624
• PEG Ratio: 2.15
• Price to Book (P/B): N/A
• Price to Sales (P/S): 17.34
• Price to Cash Flow (P/CF): 25.30
• P/FCF Ratio: 25.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $627.19
• Price Target Upside: 21.68% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 29

Mastercard demonstrates strong financial performance with robust revenue and profit growth, supported by effective cost management. While the stock is trading at a premium, reflecting high growth expectations, the company's solid balance sheet and cash flow position it well for sustained expansion. Technical indicators suggest a stable outlook, while the positive earnings call underlines future growth potential. However, challenges such as FX volatility and rising expenses are notable risks.

Positive Factors

Growth Initiatives

Mastercard is focusing on key growth initiatives and Commercial/B2B opportunities to drive future growth.

Security Enhancements

Mastercard's expanding suite of Value-Added Services focuses on reducing fraud and enhancing security, with security solutions now making up 37% of total revenues and growing at a rate above 17%.

Negative Factors

Market Performance

Shares have underperformed by 6% YTD, indicating a potential concern for investors.

Regulatory Risks

Regulatory risks are present as Mastercard's dominance and network fees have been under regulatory scrutiny, which could potentially lead to significant losses in earnings.

Mastercard Business Overview & Revenue Model

Company Description

Mastercard Incorporated (MA) is a global technology company in the payments industry, providing a wide range of financial services and products for consumers, financial institutions, merchants, governments, and businesses worldwide. Its core offerings include payment processing solutions, credit, debit, and prepaid cards, as well as related services such as fraud prevention and data analytics. Mastercard operates in various sectors, including financial services, technology, and commerce, facilitating secure and efficient payment transactions across multiple channels.

How the Company Makes Money

Mastercard makes money primarily through transaction processing fees, which are collected as a percentage of each transaction facilitated through its network. The company generates revenue from three main sources: domestic assessments, cross-border volume fees, and transaction-related fees. Domestic assessments are fees charged to issuers and acquirers based on the volume of activity on Mastercard-branded cards within a specific country. Cross-border volume fees are charged for transactions that occur between different countries, often at a higher rate due to the additional complexity and risk involved. Transaction-related fees include charges for providing value-added services such as fraud prevention, data analytics, and consulting. Significant partnerships with financial institutions, merchants, and technology companies further enhance Mastercard's revenue potential by expanding its network and increasing transaction volumes. Additionally, Mastercard earns revenue through licensing fees from its extensive portfolio of technology and payment solutions.

Mastercard Financial Statement Overview

Summary

Mastercard's financial statements reveal a company in a strong growth phase, with impressive revenue and profit expansion, robust cash generation, and a solid balance sheet. Despite high leverage, the company demonstrates financial stability and profitability. The financial health of Mastercard is well-positioned to sustain its growth and navigate future challenges.

Income Statement

Mastercard has demonstrated robust revenue growth over recent years, with a significant increase from $15.3 billion in 2020 to $28.2 billion in 2024. The company boasts high gross and net profit margins, consistently above 50% and 45% respectively, indicating strong profitability and efficient cost management. The EBIT and EBITDA margins are also healthy, showcasing solid core earnings. Overall, the income statement reflects a strong growth trajectory and profitability.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio, with total debt of $18.2 billion against $6.5 billion in equity as of 2024. While the equity ratio is relatively low due to high liabilities, the company maintains a stable return on equity, driven by strong net income. The company's asset base has expanded significantly, enhancing its capacity to support growth. Despite high leverage, the company maintains financial stability.

Cash Flow

Cash flow analysis indicates strong operating cash flow, with a substantial increase from $7.2 billion in 2020 to $14.8 billion in 2024. Free cash flow has also grown significantly, supporting strategic investments and shareholder returns. The operating cash flow to net income ratio is favorable, suggesting efficient cash generation relative to earnings. Overall, the cash flow statement reflects a robust ability to generate cash, ensuring liquidity and flexibility.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
28.17B	25.10B	22.24B	18.88B	15.30B
	Gross Profit
21.49B	19.08B	16.97B	14.39B	11.51B
	EBIT
15.58B	14.01B	12.26B	10.08B	8.08B
	EBITDA
16.80B	15.01B	12.95B	11.46B	8.72B
	Net Income Common Stockholders
12.87B	11.20B	9.93B	8.69B	6.41B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.77B	9.18B	7.41B	7.89B	10.60B
	Total Assets
48.08B	42.45B	38.72B	37.67B	33.58B
	Total Debt
18.23B	15.68B	14.02B	13.90B	12.67B
	Net Debt
9.78B	7.09B	7.01B	6.48B	2.56B
	Total Liabilities
41.57B	35.45B	32.35B	30.26B	27.07B
	Stockholders Equity
6.49B	6.93B	6.30B	7.31B	6.39B
Cash Flow		Free Cash Flow
14.31B	11.61B	10.10B	8.65B	6.52B
	Operating Cash Flow
14.78B	11.98B	11.20B	9.46B	7.22B
	Investing Cash Flow
-3.40B	-1.35B	-1.47B	-5.27B	-1.88B
	Financing Cash Flow
-10.84B	-9.49B	-10.33B	-6.55B	-2.15B

Mastercard Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 515.43
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MA, the sentiment is Negative. The current price of 515.43 is below the 20-day moving average (MA) of 528.17, below the 50-day MA of 545.58, and above the 200-day MA of 505.69, indicating a bearish trend. The MACD of -0.58 indicates Negative momentum. The RSI at 52.40 is Neutral, neither overbought nor oversold. The STOCH value of 52.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MA.

Mastercard Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
V	84 Outperform	$649.43B	33.96	50.51%	0.72%	10.35%	16.40%
DFS	77 Outperform	$42.99B	9.65	24.68%	1.89%	15.46%	45.83%
MA	76 Outperform	$469.92B	37.11	191.95%	0.53%	12.07%	17.27%
AXP	74 Outperform	$183.94B	18.72	34.47%	1.21%	10.12%	24.93%
PYPL	74 Outperform	$63.26B	16.00	20.00%	―	7.10%	4.45%
COF	71 Outperform	$66.98B	15.09	7.86%	1.37%	9.06%	-3.02%
Sector *	64 Neutral	$13.44B	9.41	9.19%	4.92%	16.30%	-8.66%

Mastercard Corporate Events

Mastercard Announces Leadership Transition with New Appointments

On February 26, 2025, Mastercard announced that Timothy Murphy will transition from Chief Administrative Officer to Vice Chair, effective May 1, 2025. Richard Verma will rejoin Mastercard as Chief Administrative Officer, succeeding Murphy. This leadership change aims to strengthen Mastercard’s strategic initiatives and regulatory relationships, with both Murphy and Verma reporting to CEO Michael Miebach. Verma, who has extensive experience in government and previously served at Mastercard, will oversee several key functions, enhancing the company’s operations and industry positioning.

Mastercard Increases CEO Michael Miebach’s Compensation

On February 6, 2025, Mastercard’s Board of Directors approved a compensation adjustment for CEO Michael Miebach, raising his base salary from $1.25 million to $1.4 million, effective March 1, 2025. Additionally, his target annual incentive bonus opportunity will increase from 200% to 250% of his new base salary, reflecting the company’s commitment to aligning executive compensation with performance goals.