Key takeaways
View moreDespite Mastercard's strong financial performance and market position, the current valuation appears slightly rich given the combination of regulatory risks, competitive pressures, and macroeconomic uncertainties. While the company's growth prospects and operational execution are excellent, the premium valuation multiples relative to sales, coupled with recent underperformance against peers, suggest the market has already priced in much of the potential upside.
- Mastercard's revenue growth remains robust, with a 17% increase in net revenue in Q1 2025, driven by its diversified business model and the secular shift towards digital payments.
- The company's profitability is exceptionally high, with a net profit margin of 45.27% as of March 31, 2025, significantly outperforming the industry average of -14.65%.
- Strategic acquisitions, such as Recorded Future, enhance Mastercard's cybersecurity capabilities and align with the increasing demand for security solutions in the digital economy.
- Despite strong financial performance, Mastercard's liquidity ratios are below industry averages, indicating a need for improved working capital management. The current ratio was 1.11 as of March 31, 2025, compared to an industry average of 2.15.
- Regulatory and competitive pressures pose ongoing risks to Mastercard's profitability and market share, requiring proactive risk management and strategic adaptation.
- Mastercard is actively investing in new technologies like AI and crypto, positioning itself to capitalize on future growth opportunities in the evolving payments landscape. AI is enabling approximately one in three of their products within value-added services and solutions in 2024.
- The company is focused on returning capital to shareholders, with $694 million in cash dividends paid and $2.508 billion in stock repurchases in the most recent quarter.
- Mastercard's stock price has shown volatility, underperforming both its peers (American Express and Visa) and the Financial Select Sector SPDR Fund (XLF) over the past year.
- Management expects continued revenue growth in 2025, driven by acquisitions and organic growth, but acknowledges increased economic and geopolitical uncertainty.
- The company's strong brand, extensive network, and diversified business model provide a solid foundation for long-term growth, but it must navigate regulatory challenges and competitive pressures effectively.
Evaluation summary
Add to research
-
Company Overview:
- Mastercard, Inc. (MA) is a technology company that operates in the global payments industry. It connects consumers, financial institutions, merchants, governments, and other organizations through electronic payment solutions and services.
- Its key products and services include a payment network that switches payment transactions, consumer payment products (debit, prepaid, bill payments), commercial and new payment flows (commercial cards, disbursements, and remittances), and value-added services and solutions (security, consumer acquisition, business insights, processing, and open banking).
- Mastercard's major customers include issuers, acquirers, and other market participants in the payments ecosystem.
- The company's performance is compared against industry peers American Express Co. (AXP) and Visa, Inc. (V), as well as the Financial Select Sector SPDR Fund (XLF) as a benchmark.
-
Financial Performance:
- Mastercard has demonstrated consistent revenue growth. For example, sales/revenue was $7.245 billion for the quarter ending March 31, 2025, compared to $6.958 billion for the quarter ending June 30, 2024.
- The company maintains high gross profit margins, consistently above 96%. For the quarter ending March 31, 2025, the gross profit margin was 96.20%. This compares favorably to the industry average of 60.22.
- Net profit margins are also strong, with 45.27% for the quarter ending March 31, 2025, significantly exceeding the industry average of -14.65%.
- Return on Average Assets was 28.86% for the quarter ending March 31, 2025, far above the industry average of 0.38%. Return on Average Total Equity was 188.92%, compared to an industry average of 3.29%. Return on Average Total Capital was 69.21%, compared to an industry average of 6.93%.
- The Earnings Report for 2025Q1 indicated that net revenues were up 17% and adjusted net income up 13% versus a year ago, driven by a diversified business model.
-
Operational Efficiency:
- Total current assets increased from $17.780 billion as of June 30, 2024, to $19.804 billion as of March 31, 2025. Total current liabilities also increased from $15.594 billion to $17.828 billion over the same period.
- Working capital was $1.976 billion as of March 31, 2025, compared to $2.186 billion as of June 30, 2024.
- Net operating cash flow was $2.354 billion for the quarter ending March 31, 2025, compared to $3.227 billion for the quarter ending June 30, 2024.
- Free cash flow to equity was $2.195 billion for the quarter ending March 31, 2025, compared to $3.112 billion for the quarter ending June 30, 2024.
- Total capital expenditure was $357 million for the quarter ending March 31, 2025, compared to $296 million for the quarter ending June 30, 2024. Depreciation, Depletion & Amortization was $275 million for the quarter ending March 31, 2025.
- Cash dividends paid were $694 million for the quarter ending March 31, 2025, and the company repurchased $2.508 billion of stock.
- The current ratio was 1.11 as of March 31, 2025, below the industry average of 2.15. The quick ratio was also 1.11.
- The total debt to total equity ratio was 281.85% as of March 31, 2025, lower than the industry average of 703.14%. Debt / EBITDA was 1.06.
-
Growth Opportunities:
- Mastercard is focused on driving sustainable growth across consumer payments, commercial new payment flows, and value-added services and solutions.
- Key initiatives include expanding contactless and tokenization capabilities, advancing crypto payments, scaling commercial payments, and penetrating existing customers with differentiated solutions. Contactless penetration aided card-present growth, representing approximately 73% of in-person switch purchase transactions.
- The company launched Mastercard Agent Pay for AI platforms and is collaborating with cryptocurrency platforms to enable cryptocurrency spending.
- Mastercard is enhancing invoice payment capabilities through partnerships and extending leadership in virtual cards.
- The company sees tremendous secular opportunity in Africa and is partnering with mobile network operators to unlock it.
- Mastercard acquired Recorded Future, a threat intelligence company, to enhance its security and cybersecurity capabilities.
-
Recent Developments and Market Sentiment:
- Mastercard's diversified business model and geographic reach provide resilience in an uncertain macroeconomic environment.
- The shift from cash to digital payments and the increasing need for cybersecurity solutions are powerful secular trends that support Mastercard's long-term growth.
- Mastercard is leveraging AI to enhance its products and services, particularly in fraud detection and cybersecurity, creating opportunities for growth. AI is enabling approximately one in three of their products within value-added services and solutions in 2024.
- Strategic partnerships are essential for expanding its reach and capturing market share, including new and renewed partnerships around the globe driving growth in consumer payments, such as CIMB Niaga in Indonesia and Grupo Promerica in Latin America.
- While the immediate revenue impact from China is small, the company is investing in the market and sees long-term potential.
- Management is closely monitoring macroeconomic factors and is prepared to adjust its expense levers as needed.
-
Risks and Threats:
- Regulatory and legislative changes related to the payments industry, including interchange fees and surcharging, pose a risk to Mastercard's profitability.
- Preferential treatment or protective actions by governments for domestic payment providers could restrict Mastercard's ability to compete.
- Evolving privacy, data, and information security regulations present ongoing challenges.
- Legal and regulatory proceedings, including interchange litigation and antitrust investigations, create uncertainty.
- Competition from traditional players as well as new technologies and business models could impact Mastercard's market share and revenue growth.
- Operational risks related to cybersecurity, service disruptions, and working with new customers/end users could disrupt Mastercard's operations and damage its reputation.
- The company acknowledged an uncertain environment with weakened consumer and business sentiment due to tariffs and geopolitical tensions.
-
Valuation Analysis:
- The Enterprise Value to EBITDA ratio for Mastercard is 28.87 as of March 31, 2025, compared to an industry average of 41.67. The Enterprise Value to Sales ratio is 17.60, compared to an industry average of 9.12.
- Potential catalysts include continued growth in digital payments, successful integration of acquisitions, and favorable regulatory outcomes.
-
Price Performance:
- Mastercard's stock price has fluctuated between $527.33 on April 22, 2025, and $590.74 on June 11, 2025, before declining to $532.97 on June 20, 2025.
- Mastercard has generally underperformed the Financial Select Sector SPDR Fund (XLF) over the past year, with returns of 17.86% compared to 23.75% for XLF. Over a two-year period, MA's underperformance is even more pronounced, with returns of 43.36% compared to 56.37% for XLF.
- Mastercard has also generally underperformed American Express (AXP) and Visa (V) over the past 1, 2, and 3 years.
-
Future Outlook:
- Mastercard expects net revenue to grow at the high end of a low double-digits to low-teens range for the full year 2025 on a currency-neutral basis, excluding acquisitions. Acquisitions are expected to add 1 to 1.5 percentage points to this growth rate.
- Operating expense growth is expected to be at the low end of a low double-digits range, excluding acquisitions and special items, with acquisitions increasing the OpEx growth rate by approximately 5 percentage points.
- For Q2 2025, net revenue growth is expected to be in the low teens range, with acquisitions contributing 1 to 1.5 percentage points.
- The company assumes consumer spending remains healthy but acknowledges increased economic and geopolitical uncertainty.
- The non-GAAP tax rate is expected to be in the 20% to 20.5% range for both Q2 and the full year.
-
Summary:
- Mastercard exhibits strong financial performance, characterized by consistent revenue growth, high profitability, and healthy cash flow generation.
- The company's liquidity is adequate but could be improved, while its solvency is healthy, with a relatively low level of financial risk.
- Mastercard faces risks from regulatory changes, competition, and operational challenges, but is well-positioned to capitalize on the increasing adoption of digital payments and deliver long-term growth.
- Strategic initiatives, such as acquisitions and investments in new technologies, are driving growth and enhancing Mastercard's competitive position.
- Management's focus on returning capital to shareholders through share repurchases and dividends reflects confidence in the company's future prospects.
- SWOT Analysis:
- Strengths: Strong brand, extensive network, high profitability, consistent revenue growth.
- Weaknesses: Liquidity ratios below industry average, reliance on interchange fees.
- Opportunities: Digital payment adoption, geographic expansion, new technologies (AI, crypto).
- Threats: Regulatory scrutiny, competition, macroeconomic uncertainty, cybersecurity risks.
- Overall, Mastercard demonstrates financial stability and strong growth potential, but stakeholders should monitor regulatory developments, competitive pressures, and macroeconomic conditions.
Price history
Add to research
Fundamentals
Add to research
Insights
- Mastercard exhibits strong financial performance, characterized by consistent revenue growth, high profitability, and healthy cash flow generation.
- The company's liquidity is adequate but could be improved, while its solvency is healthy, with a relatively low level of financial risk.
- Mastercard faces risks from regulatory changes, competition, and operational challenges, but is well-positioned to capitalize on the increasing adoption of digital payments and deliver long-term growth.
- Strategic initiatives, such as acquisitions and investments in new technologies, are driving growth in intangible assets and enhancing Mastercard's competitive position.
- Management's focus on returning capital to shareholders through share repurchases and dividends reflects confidence in the company's future prospects.
Analysis
- Revenue
- Mastercard has demonstrated consistent revenue growth, driven by the increasing adoption of digital payments and strategic initiatives.
- The company's diversified business model and geographic reach contribute to its resilience and ability to generate revenue.
- Sales/revenue is significantly above the industry average, reflecting Mastercard's strong market position.
- Profitability
- Mastercard exhibits strong profitability, with high return on assets, equity, and capital, as well as high EBITDA and net profit margins.
- The company's high gross margin reflects its strong competitive position and pricing power.
- Efficient expense management contributes to improved profitability.
- Liquidity
- Mastercard's short-term liquidity is adequate but could be improved, as its current and quick ratios are below the industry averages.
- The company has sufficient operating cash flow to meet its short-term obligations.
- Working capital management could be optimized to enhance liquidity.
- Solvency
- Mastercard's solvency is healthy, with a debt-to-equity ratio and debt/EBITDA that are below the industry averages, suggesting a lower level of financial risk.
- The company has the capacity to service its debt obligations comfortably.
- Long-term debt has increased, possibly due to recent debt issuances to fund operations and investments.
- Operational Efficiency
- Mastercard demonstrates efficient asset utilization, as indicated by the increase in accounts receivable and intangible assets.
- The company's capital allocation strategy balances organic growth, acquisitions, and shareholder returns.
- EBITDA margin is significantly above the industry average, reflecting Mastercard's strong operational efficiency.
- Cash Flow Analysis - Mastercard generates strong operating cash flow, providing ample liquidity for short-term obligations. - Free cash flow (FCF) generation supports long-term solvency and financial flexibility. - Cash dividends paid have steadily increased, reflecting a commitment to shareholder returns.
- Risk Factors
- Regulatory and legislative changes related to the payments industry, including interchange fees and surcharging, pose a risk to Mastercard's profitability.
- Competition from traditional players as well as new technologies and business models could impact Mastercard's market share and revenue growth.
- Operational risks related to cybersecurity, service disruptions, and working with new customers/end users could disrupt Mastercard's operations and damage its reputation.
- Future Outlook
- Continued revenue growth is expected, driven by the increasing adoption of digital payments and the company's strategic initiatives.
- Profitability margins are projected to remain strong, supported by efficient cost management and pricing power.
- Mastercard is well-positioned to capitalize on the secular opportunity in payments and deliver long-term growth.
- Profitability
Financial statements
Add to research
Loading...
Public filings
Add to research
- Mastercard is a leading global payments technology company, connecting a wide range of participants in the payments ecosystem through its extensive network and suite of products and services.
- The payments industry is highly competitive and subject to increasing regulation, particularly around interchange fees, data privacy/security, and anti-competitive practices. Mastercard faces risks from both traditional competitors as well as new technologies and business models.
- Mastercard has continued to grow its core business, diversify its customer base and geographic reach, and invest in new services and solutions to drive future growth. However, it remains exposed to significant legal and regulatory risks, particularly the ongoing interchange litigation in the U.S. and Europe.
- Mastercard's strong financial performance, high profitability, and healthy liquidity position have enabled it to return substantial capital to shareholders through share repurchases and dividends. However, the company's growth and profitability could be impacted by regulatory changes, competitive pressures, and legal/operational risks.
- Overall, Mastercard appears to be navigating a complex and evolving payments landscape effectively, but faces ongoing challenges and uncertainties that require close monitoring and proactive risk management.
Core Business and Operations:
- Mastercard is a technology company in the global payments industry, connecting consumers, financial institutions, merchants, governments, and other organizations through electronic payment solutions and services
- Key products and services include:
- Payment network that switches (authorizes, clears, and settles) payment transactions
- Consumer payment products (debit, prepaid, bill payments)
- Commercial and new payment flows (commercial cards, disbursements and remittances)
- Value-added services and solutions (security, consumer acquisition, business insights, processing, open banking)
- Major customers include issuers, acquirers, and other market participants in the payments ecosystem
- Competes with general purpose payment networks, debit/local networks, real-time account-based payment systems, digital wallets/fintechs, and government-backed payment solutions
Industry and Market Trends:
- Payments industry is highly competitive and subject to increasing regulation, including around interchange fees, surcharging, data privacy/security, and anti-money laundering
- Governments have taken actions to promote domestic/regional payment providers, which could restrict Mastercard's ability to compete
- Rapid technological changes and new payment methods (e.g. cryptocurrencies, CBDCs) pose both opportunities and risks
Recent Events:
- Acquired Recorded Future, a threat intelligence company, to enhance Mastercard's security and cybersecurity capabilities
- Issued $4 billion in new debt across multiple tranches to fund operations and investments
- Continued to settle litigation with merchants over interchange fees, with over 90% of U.S. interchange volume now resolved
Risk Factors:
- Regulatory and legislative changes related to payments industry, including interchange fees and surcharging
- Preferential treatment or protective actions by governments for domestic payment providers
- Evolving privacy, data, and information security regulations
- Legal and regulatory proceedings, including interchange litigation
- Competition from traditional players as well as new technologies and business models
- Operational risks related to cybersecurity, service disruptions, and working with new customers/end users
- Reliance on key customers and potential consolidation in the industry
Legal Matters:
- Ongoing litigation and regulatory proceedings related to interchange fees in the U.S. and Europe
- Antitrust investigation by the European Commission into Mastercard's network fee practices
- Class action lawsuits related to ATM non-discrimination rules and EMV liability shift
Management's Discussion and Analysis:
- Strong financial performance, with 12% growth in net revenue and 13% growth in operating expenses in 2024
- Continued growth in key business drivers like gross dollar volume, cross-border volume, and switched transactions
- Profitability remained high, with operating margin of 54.2% in 2024
- Healthy liquidity position, with $26.6 billion in cash, cash equivalents, and investments as of December 31, 2024
- Returned significant capital to shareholders through $11 billion in share repurchases and $2.4 billion in dividends in 2024
Earnings calls
Add to research
Earnings Report 2025Q1 (2025-05-01)
Key takeaways
- Diversification is Key: Mastercard's diversified business model, both geographically and across product lines, provides resilience in an uncertain macroeconomic environment.
- Secular Trends Drive Growth: The shift from cash to digital payments and the increasing need for cybersecurity solutions are powerful secular trends that support Mastercard's long-term growth.
- AI is Integral: Mastercard is leveraging AI to enhance its products and services, particularly in fraud detection and cybersecurity, creating opportunities for growth.
- Strategic Partnerships are Crucial: Mastercard's ability to form and maintain strategic partnerships is essential for expanding its reach and capturing market share.
- China Remains a Long-Term Opportunity: While the immediate revenue impact from China is small, the company is investing in the market and sees long-term potential.
- Incentive Management is Complex: The timing and structure of rebates and incentives can significantly impact revenue and profitability, requiring careful management.
- Macroeconomic Uncertainty Requires Vigilance: Mastercard is closely monitoring macroeconomic factors and is prepared to adjust its expense levers as needed.
Focus of management’s prepared remarks
- Strong Q1 Performance: Net revenues were up 17% and adjusted net income up 13% versus a year ago, driven by a diversified business model.
- Secular Opportunity in Payments: Mastercard is successfully executing against a significant secular opportunity in payments, which is a core part of their growth algorithm.
- Digital Transformation Leadership: Mastercard is at the forefront of digital transformation, delivering solutions that address evolving customer needs and make payments simple, smart, and secure.
- Resilient Business Model: The company has a well-diversified business geographically and by product, manages expenses closely, and has levers to pull if needed.
- Consumer Payments Innovation: Innovations like contactless capabilities and tokenization are foundational for payments in the digital economy, with 73% of in-person switch transactions being contactless and 35% tokenized.
- Agentic AI and Crypto Advancements: The launch of Mastercard Agent Pay and collaborations with companies like Microsoft and OpenAI aim to redefine commerce in the AI era. The company is also advancing crypto payments by collaborating with cryptocurrency platforms and enabling stablecoin settlement.
- Commercial New Payment Flows Expansion: Mastercard launched commercial point-of-sale solutions and partnered with Corpay to enhance corporate cross-border payment solutions.
- Value-Added Services and Solutions Growth: Approximately 85% of value-added services and solutions revenues are recurring, providing a stable baseline for growth. The company is leveraging one-to-many distribution with global technology partners.
- AI Integration: AI is deeply ingrained in the business, enabling solutions in the market today, with AI enabling approximately one in three of their products within value-added services and solutions in 2024.
- Strategic Partnerships: New and renewed partnerships around the globe are driving growth in consumer payments, including CIMB Niaga in Indonesia and Grupo Promerica in Latin America.
Focus of the analyst Q&A
- Composition of Cross-Border Business:
- What is the breakdown of cross-border volume between travel, e-commerce, and e-retail?
- What is the significance of U.S. inbound travel overall?
- Economics of Tokenized Offerings:
- What is the potential for further tokenization growth beyond the current 35% of card-not-present transactions?
- What are the economic implications of tokenization for Mastercard over the next several years?
- Operating Expense Cadence:
- What is the expected cadence of operating expenses throughout the year?
- What portion of operating expense growth is discretionary versus non-discretionary?
- What are the one-time costs associated with the Recorded Future integration?
- Consumer Spending Health:
- Are there any concerning trends in consumer health and spending habits, particularly with tariffs and geopolitical tensions?
- Is the company seeing any upfronting of spending?
- Impact of Capital One/Discover Deal:
- What is the potential impact on Mastercard's financials if Capital One migrates its debit portfolio to the Discover network?
- China Revenue Contribution:
- How significant is China as a contributor to Mastercard's revenue projections in the near term?
- Full Year Guidance Assumptions:
- What are the underlying assumptions for switch volume and cross-border growth in the full-year guidance?
- What is the assumption for FX volatility?
- Pricing Opportunities:
- What are the opportunities for instituting new pricing strategies in the second half of the year?
- What areas offer the most potential for price increases based on the value provided?
- Incentives and Contract Economics:
- How do incentives and rebates work at the beginning and end of contracts, particularly with wins and migrations?
- Idiosyncratic Assets in a Slowing Environment:
- What unique assets does Mastercard possess that could allow it to outperform peers in a slowing economic environment?
- Transaction Processing Yields:
- What factors contributed to the jump in transaction processing yields in Q1, despite a volume slowdown?
- Crypto Partnerships Economics:
- How is Mastercard thinking about the economics of incorporating crypto partnerships?
- How are these partnerships impacting relationships with traditional issuers?
Summary
-
Financial Performance
Mastercard reported a strong Q1 2025 with net revenue up 17% and adjusted net income up 13% year-over-year on a non-GAAP currency-neutral basis. EPS was $3.73, including an $0.08 contribution from share repurchases. These results reflect continued growth in the payment network and value-added services. The company repurchased $2.5 billion of stock during the quarter and an additional $884 million through April 28, 2025. Operating expenses increased 14%, including a 4 ppt increase from acquisitions.
-
Revenue Drivers
Growth in payment network revenue was driven by domestic and cross-border transaction and volume growth, as well as growth in rebates and incentives. Value-added services and solutions revenue increased due to scaling of security, digital, and authentication solutions, demand for consumer acquisition and engagement services, and growth in underlying drivers and price-set. Cross-border volume increased 15% globally, driven by both travel and non-travel related spending. Contactless penetration aided card-present growth, representing approximately 73% of in-person switch purchase transactions.
-
Profit Margins and Cost Management
Operating income increased 19%, including a 1 ppt headwind from acquisitions. Operating expenses increased 14%, including a 4 ppt impact from acquisitions. Expense growth was primarily driven by increased spending to support strategic initiatives. The company expects operating expense growth to increase in the second half of the year due to investments in frontline resources, infrastructure, and service development. The non-GAAP tax rate is expected to be in the 20% to 20.5% range for both Q2 and the full year.
-
Guidance and Outlook
Mastercard expects net revenue to grow at the high end of a low double-digits to low-teens range for the full year 2025 on a currency-neutral basis, excluding acquisitions. Acquisitions are expected to add 1 to 1.5 ppt to this growth rate. Operating expense growth is expected to be at the low end of a low double-digits range, excluding acquisitions and special items, with acquisitions increasing the OpEx growth rate by approximately 5 ppt. For Q2 2025, net revenue growth is expected to be in the low teens range, with acquisitions contributing 1 to 1.5 ppt. The company assumes consumer spending remains healthy but acknowledges increased economic and geopolitical uncertainty.
-
Strategic Initiatives
Mastercard is focused on driving sustainable growth across consumer payments, commercial new payment flows, and value-added services and solutions. Key initiatives include expanding contactless and tokenization capabilities, advancing crypto payments, scaling commercial payments, and penetrating existing customers with differentiated solutions. The company launched Mastercard Agent Pay for AI platforms and is collaborating with cryptocurrency platforms to enable cryptocurrency spending. They are also enhancing invoice payment capabilities through partnerships and extending leadership in virtual cards.
-
Management Commentary
Management highlighted the company's strong Q1 results and its focus on executing against a significant secular opportunity in payments. They emphasized the company's diversified business model, resilience, and ability to manage expenses. The CEO expressed excitement about advancements in Agentic AI and crypto. Management is monitoring the macroenvironment and prepared to adjust as needed. The overall tone was optimistic, with a focus on delivering long-term strategy and growth.
-
Industry and Market Conditions
The company acknowledged an uncertain environment with weakened consumer and business sentiment due to tariffs and geopolitical tensions. However, they noted that fundamentals supporting consumer spending have been solid, with low unemployment rates and wage growth outpacing inflation. They are closely monitoring US-China relationships and the impact of tariffs. The company sees tremendous secular opportunity in Africa and is partnering with mobile network operators to unlock it.
Comparative analysis
Add to research
Benchmarks (as of 2025-06-20)
Financial Select Sector SPDR Fund (XLF)
-
Performance Comparison:
- Mastercard, Inc. (MA) has generally underperformed the Financial Select Sector SPDR Fund (XLF) over the past year, with returns of 17.86% compared to 23.75% for XLF. Over a two-year period, MA's underperformance is even more pronounced, with returns of 43.36% compared to 56.37% for XLF. However, over a three-year period, MA has slightly outperformed XLF, with returns of 70.98% compared to 68.63% for XLF. The recent one-week and one-month performance shows significant underperformance by MA.
-
Risk and Return Analysis:
- The annualized returns for Mastercard, Inc. (MA) are lower than the Financial Select Sector SPDR Fund (XLF) for the 1-year and 2-year periods, but slightly higher for the 3-year period. The annualized volatility for MA has generally been higher than XLF, indicating that MA is a riskier investment. The maximum drawdown for MA was -28.25% on 2022-10-12, while the maximum drawdown for XLF was -25.81% also on 2022-10-12, indicating that MA experienced a larger peak-to-trough decline during that period.
-
Risk-Adjusted Performance:
- The Sharpe Ratio for Mastercard, Inc. (MA) has generally been lower than the Financial Select Sector SPDR Fund (XLF), indicating that XLF offers better risk-adjusted returns. The beta for MA has decreased over time and is now below 1, indicating that MA is less sensitive to market movements than it used to be.
-
Overall Assessment:
- Mastercard, Inc. (MA) has shown mixed performance compared to the Financial Select Sector SPDR Fund (XLF). While MA has outperformed XLF over a three-year period, it has underperformed over the shorter 1-year and 2-year periods. MA is also a riskier investment than XLF, as indicated by its higher annualized volatility and larger maximum drawdown. The Sharpe Ratio suggests that XLF offers better risk-adjusted returns. The decreasing beta for MA indicates that its sensitivity to market movements has decreased over time.
Peers Price History(as of 2025-06-20)
- Performance Comparison:
- Mastercard (MA) has generally underperformed American Express (AXP) and Visa (V) over the past 1, 2, and 3 years. For example, over the last year, Mastercard's return was 17.86%, while American Express's was 31.07% and Visa's was 23.91%. However, in the 6 month period, Mastercard (MA) overperformed American Express (AXP) by 0.57% but underperformed Visa (V) by 6.02%.
- Risk and Return Analysis:
- Mastercard's annualized returns have been lower than American Express's but similar to Visa's. For example, the 3-year annualized return for Mastercard is 19.58%, compared to 28.99% for American Express and 21.24% for Visa.
- American Express (AXP) generally exhibited higher volatility compared to Mastercard (MA) and Visa (V) for most of the period, especially in 2022 and early 2023.
- The maximum drawdowns were -28.25% for Mastercard (MA) on 2022-10-12, -31.55% for American Express (AXP) on 2022-09-30, and -28.6% for Visa (V) on 2022-09-30. This indicates that American Express has a higher risk profile due to its larger drawdowns.
- Risk-Adjusted Performance:
- American Express (AXP) generally had higher Sharpe Ratios than Mastercard (MA) and Visa (V) for much of the period, indicating better risk-adjusted returns.
- Mastercard (MA) generally had a beta around 1, indicating market-like sensitivity. American Express (AXP) consistently had a beta greater than 1, indicating higher sensitivity to market movements. Visa (V) generally had a beta less than 1, indicating lower sensitivity to market movements.
- Overall Assessment:
- American Express (AXP) has shown stronger performance and better risk-adjusted returns compared to Mastercard (MA) and Visa (V), but also exhibits higher volatility and larger drawdowns. Visa (V) has demonstrated more stable performance with lower volatility and drawdowns. Mastercard (MA) generally has a risk profile similar to the market.
- Recent trends indicate that all three companies experienced a spike in volatility in Q2 2025.
Peers Fundamentals(as of 2025-03-31)
-
Market Position and Size:
- Mastercard (MA) holds a significant market position with a market capitalization of $532,488.11 million, placing it between American Express (AXP) at $209,686.29 million and Visa (V) at $713,418.52 million.
- While MA's revenue ($29,053 million) is less than both AXP ($75,333 million) and V ($37,621 million), its net income ($13,143 million) surpasses AXP ($10,200 million), indicating a more efficient business model.
- MA's market capitalization reflects its strong brand recognition and established presence in the payment solutions industry.
-
Profitability and Efficiency:
- MA demonstrates exceptional profitability, with a Gross Profit Margin of 96.71%, significantly higher than AXP (60.89%), V (77.1%), and the industry average (60.22%).
- Its EBITDA Margin of 60.98% is greater than AXP (29.13%) and the industry average (23.29%), though less than V (70.38%).
- MA's Net Profit Margin of 45.24% exceeds AXP (13.54%) and the industry average (-14.65%), but is less than V (52.21%).
- These high profit margins, despite lower revenue compared to peers, highlight MA's efficient cost management and strong pricing strategy.
-
Financial Health and Stability:
- MA's Current Ratio of 1.11 is slightly greater than V (1.08) but less than the industry average (2.15), indicating moderate liquidity.
- Its Total Debt to Total Equity Ratio of 281.85 is greater than AXP (169.2) and V (54.59) but less than the industry average (703.14), suggesting a higher reliance on debt compared to its peers.
- MA's Debt / EBITDA ratio of 1.06 is less than AXP (2.41) but greater than V (0.78), and significantly less than the industry average (30.9), indicating manageable debt levels relative to its earnings.
-
Valuation and Market Perception:
- MA's Enterprise Value To Sales ratio of 17.6 is significantly greater than AXP (2.51) but less than V (18.5), and greater than the industry average (9.12).
- Its Price To Earnings ratio of 41.13 is greater than AXP (20.91) and V (37.42), and greater than the industry average (19.32).
- MA's Price to Book Ratio of 79.99 is significantly greater than AXP (6.72) and V (19.24), and greater than the industry average (3.51).
- These elevated valuation metrics suggest that the market has high expectations for MA's future performance.
-
Cash Flow and Capital Management:
- MA's Net Operating Cash Flow of $15,449 million is greater than AXP ($13,262 million) but less than V ($21,889 million).
- Its Free Cash Flow of $14,276 million is greater than AXP ($11,312 million) but less than V ($20,508 million).
- MA's strong cash flow generation, as evidenced by its substantial free cash flow, indicates efficient capital management.
-
Growth and Future Prospects:
- MA shows superior growth in Sales/Revenue and EBITDA, particularly in Year -4 to -3.
- Its EBIT Margin growth is also consistently higher than the peer group average.
- However, MA's Free Cash Flow and Free Cash Flow Margin growth are consistently lower than the peer group average.
- MA's most recent year-over-year growth rates for Sales/Revenue, EBITDA, and Free Cash Flow are greater than its 5-year CAGRs, indicating acceleration trends.
-
Potential for Investment:
- MA presents an attractive investment opportunity due to its strong financial health, superior profitability, and efficient returns.
- Its substantial market capitalization and robust cash flow generation further enhance its investment appeal.
- However, its higher valuation metrics and reliance on debt compared to Visa warrant careful consideration.
-
Key Risks and Considerations:
- MA's higher valuation metrics suggest that the market has high expectations for its future performance, which may not be sustainable.
- Its reliance on debt compared to Visa could pose a risk if interest rates rise or if its earnings decline.
- Its lower Free Cash Flow and Free Cash Flow Margin growth compared to the peer group average could indicate potential challenges in sustaining its cash flow generation.
-
Overall Assessment:
- Mastercard (MA) exhibits strong financial health and performance, characterized by high profitability, efficient returns, and robust cash flow generation.
- Its competitive position within the payment solutions industry is supported by its substantial market capitalization and strong brand recognition.
- However, its higher valuation metrics and reliance on debt compared to Visa warrant careful monitoring.
Comparison metrics
Add to research