Is Mastercard Stock a Buy Before Q4 Earnings? Check Key Estimates

Payments giant Mastercard Incorporated MA is set to report fourth-quarter 2024 results on Jan. 30, 2025, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $3.68 per share on revenues of $7.38 billion.See the Zacks Earnings Calendar to stay ahead of market-making news.Fourth-quarter earnings estimates have been revised downward by a penny over the past seven days. However, the bottom-line projection indicates an increase of 15.7% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 12.8%. Image Source: Zacks Investment ResearchFor 2024, the Zacks Consensus Estimate for Mastercard’s revenues is pegged at $28.06 billion, implying a rise of 11.8% year over year. Also, the consensus mark for 2024 earnings per share is pegged at $14.47, implying a jump of around 18% on a year-over-year basis.Mastercard has a robust history of surpassing earnings estimates, beating the consensus estimate in each of the last four quarters, with the average surprise being 3.2%. This is depicted in the figure below.Mastercard Incorporated Price and EPS Surprise Mastercard Incorporated price-eps-surprise | Mastercard Incorporated QuoteQ4 Earnings Whispers for MastercardHowever, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here.MA has an Earnings ESP of -0.11% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.What’s Shaping Mastercard’s Q4 Results?Mastercard is expected to have witnessed an increase in fourth-quarter revenues, driven by increased spending in the travel and entertainment sectors and cross-border volumes. The Gross Dollar Volume (GDV), reflecting the value of transactions on Mastercard-branded cards, is expected to have benefited from increased card usage, both domestically and internationally, in the to-be-reported quarter.The Zacks Consensus Estimate for the company’s total GDV for all MA-branded programs suggests an 8.9% rise from the prior-year quarter’s reported figure, whereas our model predicts a 9.4% increase. We expect GDV from domestic operations to increase by almost 8.1% year over year and 10% in international operations. Increasing strength in Latin American and European operations is likely to have driven the metric.Switched transactions are expected to have experienced an upsurge, driven by resilient consumer spending and increased contactless acceptance initiatives pursued by the payment technology company. The Zacks Consensus Estimate for its switched transactions indicates a 10% rise from the prior-year quarter’s reported figure, whereas our estimate suggests a 9.3% increase.Growing cross-border travel is anticipated to have had a positive impact on Mastercard's cross-border volumes. As such, the consensus estimate for cross-border assessments suggests an increase of 19.9% compared with the previous year, while our projection indicates growth of 21.8%. Further, our model predicts domestic assessments and transaction processing assessments to witness an 11.5% and 12.2% year-over-year increase, respectively.The Zacks Consensus Estimate for Value-added Services and Solutions net revenues indicates 17.2% year-over-year growth, while our model estimate suggests an 18.2% increase in the fourth quarter. Continued demand for its consulting and marketing services and loyalty solutions is likely to have driven this metric.While the above-mentioned factors are expected to have positioned the company for growth from the past year, rising expenses, and rebates and incentives are likely to have partially offset the positives, making an earnings beat uncertain.Mastercard’s adjusted operating costs are likely to have increased in the fourth quarter due to higher G&A costs and Advertising & Marketing expenses, potentially hampering its profitability. We expect total adjusted operating expenses to increase 13.8% from the prior-year quarter’s actuals. Furthermore, our estimate for payments network rebates and incentives suggests a 19% year-over-year increase.Mastercard’s Price Performance & ValuationMastercard's stock has exhibited an upward movement over the past year. However, its gain of 21.1% has underperformed the industry’s growth of 23.9%. In comparison, its peers like Visa Inc. V and American Express Company AXP have gained 20.6% and 60%, respectively, during this time. Additionally, Mastercard has lagged the S&P 500, which has gained 24.8% during the same period.Price Performance – MA, V, AXP, Industry & S&P 500 Image Source: Zacks Investment ResearchNow, let’s look at the value Mastercardoffers investors at current levels.The company’s valuation looks stretched compared with the industry average. Currently, Mastercard is trading at 32.45X forward 12 months earnings, above its five-year median of 31.67X and the industry’s average of 25.46X. Image Source: Zacks Investment ResearchIn comparison, Visa is attractively valued, trading at 28.30X forward 12-months earnings. American Express is trading at 20.85X, offering a better value at the moment.How Should You Play Mastercard Ahead of Q4 Earnings?Mastercard continues to demonstrate strong growth, driven by an increase in processed transactions and GDV. The robust performance of its Value-Added Services and Solutions segment highlights the success of its diversification strategy. With a focus on digital innovation and expansion in emerging markets like Southeast Asia and Latin America, Mastercard is well-positioned for sustained long-term growth.The company's strategic investments and global partnerships underscore its commitment to broadening its network and maintaining its leadership in the payments industry. Additionally, MA's strong cash position supports significant share buybacks, dividend payouts and inorganic growth, ensuring financial stability and value for current shareholders.However, short-term challenges may weigh on the stock. Rising costs, increased incentives, regulatory pressures and ongoing lawsuits across domestic and international markets could limit margin growth. The Credit Card Competition Act of 2023 also poses potential risks. While business-friendly policies under President Donald Trump could provide some relief, the evolving regulatory environment remains a factor to watch.While Mastercard's long-term growth prospects remain solid, now may not be the ideal time to buy. Existing shareholders can continue to benefit from the company’s initiatives, but potential investors might prefer to wait for a more attractive entry point,considering valuation concerns limiting near-term gains.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks