Company Reports

Mastercard’s first-quarter results show that the company is on a steady path and performing roughly in line with its peer Visa. Following the dramatic ups and downs of the pandemic and the ensuing recovery, we think Mastercard has settled into a more stable environment, and the company’s first-quarter results are largely in line with our long-term expectations. We will maintain our $451 fair value estimate and wide moat rating, and we consider shares fairly valued at the moment.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which should provide plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even as growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

Mastercard's fourth-quarter results were basically in line with what we saw from its peer Visa. Over the past few years, both companies have been buffeted by the pandemic and the subsequent recovery, as well as one-time issues like Russia. While macro uncertainty still exists, we think results have now largely normalized, and we expect growth will hold at a level roughly in line with our long-term expectations. We will maintain our $421 fair value estimate for the wide-moat company and see shares as roughly fairly valued at the moment.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which should provide plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even as growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

Mastercard's third-quarter results largely mirrored those of its peer Visa, although growth did slow a bit sequentially. Overall, consumer spending appears to be resilient, and Mastercard continues to benefit from a bounceback in cross-border spending—in which the consumer and merchant are in different countries. Mastercard’s fees on these transactions are much higher.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even as growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

Like Visa, Mastercard's second quarter was uneventful, with the company largely maintaining its recent trajectory. Overall, we didn't see anything in the quarter that would materially alter our long-term view and we will maintain our $389 per-share fair value estimate for the wide-moat company. We see shares as fairly valued at the moment.

Mastercard turned in a solid first quarter. Results largely mirrored what we saw at peer Visa, although Mastercard performed a little better, in our view. Overall, we think that the wide-moat company continued to show good resilience in the face of economic uncertainty. We will maintain our $389 per share fair value estimate and see shares as about fairly valued.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even if growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

We think Mastercard’s fourth-quarter results show the wide-moat company holding up relatively well amid a mix of headwinds and tailwinds. As expected, growth is slowing, and uncertainty in the macroenvironment clouds the near-term view. But the company also has some factors working in its favor in the current environment, and the long-term picture remains bright, in our view. We will maintain our $369 fair value estimate and see the shares as fairly valued at the moment.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even if growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

Mastercard's third-quarter results largely mirrored what we saw from Visa. The company continues to enjoy strong growth as it bounces back from pandemic-related impacts and favorable long-term secular trends assert themselves. We will maintain our $369 fair value estimate and wide moat rating and see the shares as modestly undervalued.

Mastercard’s second-quarter results largely echoed what we saw from Visa, although Mastercard posted stronger growth. We think the bounce-back in travel and cross-border volumes positions wide-moat Mastercard for outsized growth in the near term, absent an economic downturn. To that point, management joined Visa in stating that consumer spending remains strong. We will maintain our $369 fair value estimate.

Mastercard’s first-quarter results largely mirrored what we saw from Visa, as the networks continue to bounce back from the headwinds they have faced through the pandemic. In our view, the relatively quick recovery supports our wide moat rating and highlights the favorable long-term secular backdrop for Mastercard. The exit from Russia will be a bit of a drag this year, but even factoring this in, we expect relatively strong growth in the near term. We will maintain our $369 fair value estimate.

Visa and Mastercard announced that they have suspended operations in Russia. As a result, cards issued by Russian banks will no longer work outside Russia, and cards issued outside Russia will not work within Russia. For both networks, transactions related to Russia accounted for 4% of net revenue, so this decision will represent a modest headwind this year. However, we believe both networks were positioned for outsize growth in 2022, as a rebound in travel and cross-border volume should positively affect revenue, and interim results announced by Visa suggest cross-border volume is picking up as the omicron variant has faded. Taking these factors in balance, we believe both networks will still enjoy solid growth this year. After reviewing our projections, we will maintain our fair value estimates of $221 for Visa and $369 for Mastercard, as well as our wide moat ratings for both.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even if growth in developed markets slows. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

While Mastercard still faces some headwinds, year-over-year growth was strong in the fourth quarter as the company continued to rebound from the impact of the pandemic. In our view, the relatively quick recovery and the company’s strong profitability through the pandemic support our wide-moat rating, and we believe the secular drivers that have supported Mastercard’s historical growth remain in place. While some near-term uncertainty remains given the rise of new variants and the fact that cross-border volumes have yet to fully recover, we think the company should be able to continue to achieve relatively high growth in the near term as headwinds ease. We will maintain our $352 fair value estimate.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value over the long term. Digital payments, on a global basis, surpassed cash payments just a couple of years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even if growth in developed markets slows. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.

Third-quarter results for Mastercard largely mirrored what we saw from Visa, with volumes showing ongoing recovery from the impact of the pandemic. While some areas of the business still face significant headwinds, the relatively quick bounceback we’ve seen for the networks supports our favorable long-term secular view, and we think the combination of attractive long-term growth prospects and the company’s wide moat makes Mastercard a fundamentally attractive company. Nothing in the quarter materially altered our long-term view, and we will maintain our $337 fair value estimate.

Mastercard has multiple characteristics that should draw investors’ attention. First, despite the evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing shift toward electronic payments, which provides plenty of opportunities to utilize its wide moat to create value. Digital payments, on a global basis, surpassed cash payments just a couple of years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even if growth in developed markets slows. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts in the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.