KBW Drops Word on Mobile Payments Mainstay Mastercard’s Earnings

May 2, 2019         By: Steven Anderson

Mastercard recently dropped word about its earnings figures, and the numbers surrounding same turned out to be better than most anyone expected. To that end, Keefe, Bruyette & Woods also sent word our way about their analyses of said subject, leading off with the notation that the company had one “solid quarter”.

Mastercard’s earnings per share (EPS) figure came out at $1.80, with operating EPS coming out at $1.78. Both beat established estimates, including the KBW analyst estimate of $1.65 and the consensus estimate only slightly higher at $1.66. Those wondering why EPS and operating EPS came out differently should note that Mastercard landed a $30 million tax benefit.

However, KBW also points out that the fundamentals were in place, with Mastercard generating both at $0.03 per share boost in revenue as well as a $0.03 per share cut in operating expenses. It reduced “other expenses” by $0.01 per share, and also benefited from a lower tax rate accounting for $0.05 per share.

KBW noted that WW GDV growth—on a “constant currency basis”—was stronger than previously expected, a note that made KBW analysis look to revisit management on other topics that might unexpectedly change things going forward. Visa even chipped in some points to consider, like the timing of the Easter holiday and the number of processing days.

KBW even noted that cross-border volume growth was at 13 percent up on this time last year, but that growth is slowing somewhat. The fourth quarter of fiscal year 2018 revealed that growth was up 17 percent against that previous year’s figures, suggesting that the cross-border market for Mastercard may be topping out.

It’s worth noting here that growth does eventually slow; no market can grow permanently. Still though, slowing growth may be a sign that market saturation is approaching or there’s about to be a turnaround, so the astute company will look for new directions in which to branch out before gains are lost. There’s also something to be said for the notion of a “cash cow,” which just produces revenue at steady rates.

Either way, when you beat estimates, it’s a good day, and Mastercard certainly had one of those, showing us why it’s a leader in the mobile payments space.