Mastercard (MA) AI Stock Analysis

• Market Cap: $531.61B
• Dividend Yield: 0.48%
• Average Volume (3M): 2.17M
• Price to Earnings (P/E): 41.1
• Beta (1Y): 0.80
• Revenue Growth: 12.94%
• EPS Growth: 13.22%
• Country: US
• Employees: 35,300
• Sector: Financial
• Sector Strength: 83
• Industry: Financial - Credit Services
• EPS (TTM): 3.73
• Shares Outstanding: 901,263,200
• 10 Day Avg. Volume: 1,945,256
• 30 Day Avg. Volume: 2,169,158
• PEG Ratio: 15.03
• Price to Book (P/B): 78.73
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 34.04
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 4.78
• Enterprise Value/Gross Profit: 23.86
• Enterprise Value/Ebitda: 7.99
• 1Y Price Target: $639.10
• Price Target Upside: 8.30% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 23

• Rating: 77 Outperform
• Price Target: ―

Mastercard's stock is rated positively due to its strong financial performance, highlighted by impressive profitability and cash generation capabilities. Technical indicators show an upward trend, though the stock is approaching overbought territory. Valuation metrics indicate a premium, suggesting high market expectations. The earnings call provided optimistic guidance, despite noting increased expenses and geopolitical risks.

Positive Factors

Earnings

Mastercard's 1Q25 adjusted net income surpassed analysts’ estimates, driven by strong cross-border volume.

Market Potential

Mastercard sees significant expansion potential with a 14% penetration rate in a $115 trillion addressable market, focusing on high-growth areas like peer-to-peer payments and remittances.

Revenue Growth

Q1 revenues beat expectations across the board.

Negative Factors

Operating Expenses

Operating expenses are expected to be higher in the second half.

Regulatory Risks

There are regulatory risks due to Mastercard's dominance in the payment network, which could potentially impact its earnings.

Volume Growth

Transaction and volume growth is viewed as somewhat tepid compared to consensus.

Mastercard Business Overview & Revenue Model

Company Description

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers other payment-related products and services. The company offers integrated products and value-added services for account holders, merchants, financial institutions, businesses, governments, and other organizations, such as programs that enable issuers to provide consumers with credits to defer payments; prepaid programs and management services; commercial credit and debit payment products and solutions; and payment products and solutions that allow its customers to access funds in deposit and other accounts. It also provides value-added products and services comprising cyber and intelligence solutions for parties to transact, as well as proprietary insights, drawing on principled use of consumer, and merchant data services. In addition, the company offers analytics, test and learn, consulting, managed services, loyalty, processing, and payment gateway solutions for e-commerce merchants. Further, it provides open banking and digital identity platforms services. The company offers payment solutions and services under the MasterCard, Maestro, and Cirrus. Mastercard Incorporated was founded in 1966 and is headquartered in Purchase, New York.

How the Company Makes Money

Mastercard makes money primarily through fees associated with its payment processing services. The company charges financial institutions fees for the services it provides, including transaction processing, which encompasses authorization, clearing, and settlement of payments. Mastercard's revenue model includes assessment fees, which are a percentage of the gross dollar volume of activity on Mastercard-branded cards, and transaction processing fees, which are based on the number of transactions processed. Additionally, Mastercard earns revenue from cross-border fees when cardholders use their cards in a different country from where they were issued. The company also generates income from value-added services such as fraud management, data analytics, consulting, and loyalty solutions. Significant partnerships with financial institutions, merchants, and technology providers further enhance Mastercard's revenue streams by expanding its global reach and facilitating new product offerings.

Mastercard Financial Statement Overview

Summary

Mastercard demonstrates strong financial health with impressive profitability and cash generation capabilities. Key strengths include a high net profit margin of 45.22% and a robust return on equity of 196.28%. The company exhibits a solid cash flow, with a free cash flow growth rate of 6.59%. However, a high debt-to-equity ratio of 2.81 indicates significant leverage, which needs monitoring.

Income Statement

Mastercard has shown robust growth in its income statement metrics. The TTM (Trailing-Twelve-Months) gross profit margin stands at 82.27%, indicating strong profitability from its operations. The net profit margin is 45.22%, reflecting efficient cost management. Revenue growth over the years is commendable, with a notable increase from 2024 to 2025. The EBIT and EBITDA margins are impressive at 55.48% and 58.47%, respectively, underscoring operational efficiency.

Balance Sheet

The balance sheet reveals a moderately high debt-to-equity ratio of 2.81, indicating significant leverage. However, the return on equity is strong at 196.28%, showing effective use of shareholder capital. The equity ratio is 13.81%, suggesting a lower proportion of assets financed by equity, which could be a potential risk if leverage increases further.

Cash Flow

Cash flow analysis shows a positive trajectory with a free cash flow growth rate of 6.59% from 2024 to TTM. The operating cash flow to net income ratio is 1.18, and the free cash flow to net income ratio is 1.16, indicating strong cash conversion and a healthy cash generation capability.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
29.07B	28.17B	25.10B	22.24B	18.88B	15.30B
	Gross Profit
22.22B	21.49B	19.08B	16.97B	14.39B	11.51B
	EBIT
16.13B	15.58B	14.01B	12.26B	10.08B	8.08B
	EBITDA
17.36B	16.80B	15.01B	12.95B	11.46B	8.72B
	Net Income Common Stockholders
13.14B	12.87B	11.20B	9.93B	8.69B	6.41B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.89B	8.77B	9.18B	7.41B	7.89B	10.60B
	Total Assets
48.47B	48.08B	42.45B	38.72B	37.67B	33.58B
	Total Debt
18.80B	18.23B	15.68B	14.02B	13.90B	12.67B
	Net Debt
11.23B	9.78B	7.09B	7.01B	6.48B	2.56B
	Total Liabilities
41.77B	41.57B	35.45B	32.35B	30.26B	27.07B
	Stockholders Equity
6.67B	6.49B	6.93B	6.30B	7.31B	6.39B
Cash Flow		Free Cash Flow
15.25B	14.31B	11.61B	10.10B	8.65B	6.52B
	Operating Cash Flow
15.50B	14.78B	11.98B	11.20B	9.46B	7.22B
	Investing Cash Flow
-3.57B	-3.40B	-1.35B	-1.47B	-5.27B	-1.88B
	Financing Cash Flow
-11.14B	-10.84B	-9.49B	-10.33B	-6.55B	-2.15B

Mastercard Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 590.12
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MA, the sentiment is Positive. The current price of 590.12 is above the 20-day moving average (MA) of 578.49, above the 50-day MA of 549.85, and above the 200-day MA of 527.37, indicating a bullish trend. The MACD of 9.26 indicates Positive momentum. The RSI at 65.94 is Neutral, neither overbought nor oversold. The STOCH value of 92.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MA.

Mastercard Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
V	82 Outperform	$717.92B	37.66	50.03%	0.62%	10.19%	12.45%
DFS	78 Outperform	$50.34B	10.69	28.29%	1.40%	9.42%	128.55%
MA	77 Outperform	$531.61B	41.07	188.92%	0.48%	12.94%	13.22%
PYPL	77 Outperform	$71.41B	16.47	22.20%	―	4.50%	12.82%
AXP	76 Outperform	$211.91B	21.13	34.02%	0.96%	8.45%	17.89%
COF	73 Outperform	$126.84B	16.64	7.90%	1.21%	6.69%	-6.76%
Sector *	64 Neutral	$12.85B	9.81	7.59%	16985.65%	12.30%	-7.71%

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.