MasterCard profit, sales top estimates; Shares rise on earnings beat

Key Points
  • Earnings per share: $1.01 vs. Thomson Reuters' consensus estimate of 95 cents.
  • Revenue was $2.734 for the period vs. a Reuters estimate of $2.651 billion.
  • MasterCard reported a 12.7 percent increase in quarterly profit, as more consumers purchased items using credit and debit cards.
Mastercard tops Q1 street forecasts

MasterCard reported first-quarter earnings and sales Tuesday that topped analysts' expectations, sending shares of the stock higher.

Here's what the company reported vs. what the Street was expecting:

  • Earnings per share: $1.01 vs. estimate of 95 cents according to Thomson Reuters' consensus survey.
  • Revenue: $2.734 vs. estimate of $2.651 billion, according to Thomson Reuters.

Shares closed 1.5 percent higher on Tuesday.

MasterCard reported a 12.7 percent increase in quarterly profit for the period ended March 31, as more consumers purchased items using credit and debit cards, the company said.

"We're off to a very good start, with strong revenue and earnings growth driven by solid transaction and volume levels this quarter," CEO Ajay Bangasaid in a statement.

MasterCard's net income rose to $1.08 billion for the quarter, from $959 million a year ago.

As of March 31, the payment network said its customers have issued 2.4 billion MasterCard and Maestro-branded cards. First-quarter adjusted gross dollar volume was up 8 percent, and purchase volume grew 9 percent, MasterCard added.

During the first quarter MasterCard also said it repurchased approximately 9 million shares at a cost of $1 billion, and has returned $238 million to shareholders in the form of dividends. The company now has $3.8 billion remaining under current repurchase program authorizations.

Staying innovative

The payment network recently unveiled a payment card in South Africa featuring a biometric fingerprint scanner.

This is one effort by MasterCard to create a safer and more efficient way of payment authentication amid heightened concerns over identity theft and hacking.

The United States represents the company's largest market, though MasterCard deals in 150 currencies in total and reported an increase in "cross-border volumes" of 13 percent last quarter.

A close competitor, American Express, has been revamping its premium Platinum card lately, which now offers perks like a $200 credit toward Uber rides each year, an invitation to an exclusive pop-up restaurant in the Hamptons and $200 for airline fees.

Meanwhile, MasterCard hopes to expand its own millennial- friendly MasterPass, a digital wallet service, and has said it will expedite advertising and marketing spending in the first half of 2017.

The company will likely spend more on MasterPass, security and geographic expansion in coming quarters, according to analysts.

As of Tuesday's close, shares of MasterCard have climbed 20 percent over the past 12 months and are up about 14 percent this year.

MA 12-month performance 

Source: FactSet