Over the last six months, Mastercard’s shares have sunk to $516.69, producing a disappointing 10.9% loss - a stark contrast to the S&P 500’s 8% gain. This may have investors wondering how to approach the situation.
Given the weaker price action, is now a good time to buy MA? Find out in our full research report, it’s free.
Why Is Mastercard a Good Business?
Recognizable by its iconic "Priceless" advertising campaign that has run in over 120 countries, Mastercard (NYSE: MA) operates a global payments network that connects consumers, financial institutions, merchants, and businesses, enabling electronic transactions and providing payment solutions.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
Thankfully, Mastercard’s 17% annualized revenue growth over the last five years was impressive. Its growth surpassed the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Mastercard’s EPS grew at 23.1% compounded annual growth rate over the last five years, higher than its 17% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity, or ROE, quantifies financial firm profitability relative to shareholder equity — an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, Mastercard has averaged an ROE of 174%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Mastercard has a strong competitive moat.
Final Judgment
These are just a few reasons why we’re bullish on Mastercard. With the recent decline, the stock trades at 26.7× forward P/E (or $516.69 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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