MasterCard Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component MasterCard (NYSE:MA) will unveil its latest earnings on Wednesday, October 31, 2012. Mastercard is a multinational company whose principal business is to process payments and to provide related services to financial institutions and other customers. Its main services are in support of the credit, debit, prepaid, and related payment programs.

MasterCard Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $5.93 per share, a rise of 5.3% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from $6.11. Between one and three months ago, the average estimate moved down. It has been unchanged at $5.93 during the last month. Analysts are projecting profit to rise by 17% compared to last year’s $21.88.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 9 cents, reporting profit of $5.65 per share against a mean estimate of net income of $5.56 per share.

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A Look Back: In the second quarter, profit rose 15.1% to $700 million ($5.55 a share) from $608 million ($4.76 a share) the year earlier, exceeding analyst expectations. Revenue rose 9.2% to $1.82 billion from $1.67 billion.

Wall St. Revenue Expectations: Analysts are projecting a rise of 6.6% in revenue from the year-earlier quarter to $1.94 billion.

Stock Price Performance: Between August 29, 2012 and October 25, 2012, the stock price had risen $23.54 (5.5%), from $425.82 to $449.36. The stock price saw one of its best stretches over the last year between January 26, 2012 and February 9, 2012, when shares rose for 11 straight days, increasing 14% (+$48.57) over that span. It saw one of its worst periods between October 17, 2012 and October 25, 2012 when shares fell for seven straight days, dropping 7% (-$33.64) over that span.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 27.3% in the third quarter of the last fiscal year, 20.2% in the fourth quarter of the last fiscal year and 17.1% in the first quarter before increasing again in the second quarter.

After experiencing income increases the last two quarters, the company is hoping to keep the momentum going with this earnings announcement. In the first quarter, profit rose 21.4% before increasing in the second quarter.

Analyst Ratings: With 22 analysts rating the stock a buy, one rating it a sell and six rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.92 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.98 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 5.3% to $4.31 billion while assets rose 2.1% to $8.28 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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