Mastercard Incorporated (NYSE: MA) is preparing to announce its fourth-quarter results next week, with analysts predicting strong revenue and earnings growth. The company has performed well in recent quarters, benefitting from changing trends in consumer spending amid inflation pressure and economic uncertainties.
A month ago, the New York-headquartered payments behemoth’s stock reached a new high. It has been gaining steadily since mid-2024, recovering from the weakness experienced in the first half of the year. In general, market watchers are bullish on the stock’s prospects, with the average price target indicating a 10% growth in 12 months. For investors, it would be prudent to keep MA on their watchlists as it may continue to be a top-performing stock this year.
Estimates
It is estimated that Mastercard’s adjusted profit increased to $3.71 per share in the final three months of FY24 from $3.18 per share in Q4 2023. The growth reflects an anticipated 13% year-over-year increase in revenues to $7.38 billion in the fourth quarter. The company is expected to publish the report on Thursday, January 30, at 8:00 am ET.
Travel spending has recovered steadily in the post-pandemic era, which often involves the use of credit cards. The inflation-induced shift to digital payments, with consumers choosing non-cash payment methods for essentials, has also contributed to the positive financial performance of credit card companies like Mastercard and Visa.
As part of its strategy to use crypto technologies to scale and to bring real-life use cases to consumers, Mastercard recently entered into a partnership with Stellar to integrate its Crypto Credential system into the latter’s network.
Strong Q3
In the third quarter, revenue increased 13% annually to $7.4 billion, exceeding estimates. Currency-neutral revenue growth was 14%. That translated into an increase in adjusted earnings to $3.89 per share in Q3 from $3.39 per share in the prior year period. Analysts were looking for a slower growth. Unadjusted profit was $3.3 billion or $3.53 per share, compared to $3.2 billion or $3.39 per share in Q3 2023.
Mastercard’s CEO Michael Miebach said at the Q3 earnings call, “The labor market remained strong, even if slightly below historically tight levels. And, inflation has moderated, albeit at varied levels across categories and countries. Overall, we remain positive about our growth outlook, but we will continue to monitor the environment. We will continue to focus on the things we can control, and execute on our growth algorithm by tapping into the sizable secular shift opportunity to electronic payments, and that across both ‘spend’ and transactions.”
On Friday, Mastercard’s stock opened slightly higher and maintained that momentum in the early hours of the session. The value has increased by a fifth over the past six months.