Company Introduction
Headquarters Location: Purchase, New York, USA
Core Business Summary: Mastercard is a leading global payments technology company that enables secure, convenient, and innovative transactions between consumers, merchants, and financial institutions.
Overview
$579.84
39.10
14.83
$524.18B
Company Overview
Core Products & Services: Payment processing, transaction services, and payment solutions for consumers, merchants, and financial institutions.
Industry Sector: Financial Services, Payment Processing
Industry Trends
Industry Growth: The global payment processing market is expected to grow at a CAGR of 10.4% from 2022 to 2027.
Key Demand Drivers: Increasing adoption of digital payments, e-commerce growth, and contactless payments.
Major Competitors: Visa, PayPal, American Express
Financials
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $9.67B | $10.78B | $12.50B | $14.95B | $16.88B | $15.30B | $18.88B | $22.24B | $25.10B | $28.17B |
| YoY % | +11.5% | +16.0% | +19.6% | +12.9% | -9.4% | +23.4% | +17.8% | +12.9% | +12.2% | |
| EBITDA | $5.39B | $6.11B | $7.11B | $7.85B | $10.48B | $8.72B | $11.46B | $12.95B | $15.01B | $16.80B |
| YoY % | +13.4% | +16.4% | +10.4% | +33.5% | -16.8% | +31.4% | +13.0% | +15.9% | +11.9% | |
| FCF | $3.70B | $4.10B | $5.13B | $5.72B | $7.46B | $6.52B | $8.65B | $10.10B | $11.61B | $14.31B |
| YoY % | +10.8% | +25.1% | +11.5% | +30.4% | -12.6% | +32.7% | +16.8% | +15.0% | +23.3% | |
| EPS | 3.44 | 3.76 | 4.59 | 6.49 | 7.78 | 6.43 | 8.41 | 10.65 | 12.26 | 14.61 |
| YoY % | +9.3% | +22.1% | +41.4% | +19.9% | -17.4% | +30.8% | +26.6% | +15.1% | +19.2% |
Growth Drivers
Historical Drivers: Expansion into new markets, strategic partnerships, and investments in digital payment technologies.
Future Drivers: Adoption of emerging technologies like blockchain, artificial intelligence, and the Internet of Things (IoT), as well as growing demand for contactless payments and digital wallets.
Examples: Mastercard's acquisition of Nets' account-to-account payment business, partnership with Microsoft to develop blockchain-based identity verification
Market Position
Competitive Position: Mastercard is one of the largest payment processing companies globally, with a strong brand and extensive network.
Estimated Market Share: approximately 30% of the global payment processing market
Technological Moat: Mastercard's proprietary payment processing network and security technologies provide a significant barrier to entry for competitors.
Strengths
- Mastercard's revenue has grown at a CAGR of 13.4% over the past 5 years, driven by increasing transaction volumes and expansion into new markets.
- Mastercard generates revenue from a diverse range of sources, including transaction processing, cross-border transactions, and payment solutions.
- Mastercard has a strong balance sheet, with $12.8 billion in cash and cash equivalents and $6.4 billion in long-term debt as of 2022.
- Mastercard has a strong track record of innovation, with investments in emerging technologies like blockchain, AI, and IoT.
Weaknesses
- Mastercard is subject to regulatory risks, including changes to payment processing regulations and anti-trust laws.
- The payment processing industry is highly competitive, with established players like Visa and American Express, as well as new entrants like fintech companies.
- Mastercard is vulnerable to cybersecurity risks, including data breaches and hacking attacks.
- Mastercard's revenue is sensitive to economic downturns, which can reduce consumer spending and transaction volumes.
Valuations
Valuations for MA
| Formula | Bull | Base | Bear | Margin of Safety |
|---|---|---|---|---|
| Ben Graham | $570.96 | $481.98 | $422.66 | -20.3% |
| Peter Lynch | – | $254.65 | – | -127.7% |
Rule of thumb (Lynch):
PEG ≈ 1 → Fairly valued
PEG < 1 → Undervalued (growth cheap relative to earnings)
PEG > 1.5 → Overvalued
Outlook
Opportunities: Mastercard is well-positioned to benefit from the growing demand for digital payments, contactless payments, and emerging technologies like blockchain and AI.
Risks: Regulatory risks, competition, and cybersecurity risks could impact Mastercard's growth and profitability.
Horizon: Over the next 3-5 years, Mastercard is expected to continue to grow its revenue and expand its presence in new markets, driven by its strong brand, innovative technologies, and strategic partnerships.
Stock Price Performance
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Price | 95.87 | 112.24 | 171.60 | 239.05 | 228.61 | 363.30 | 363.97 | 366.47 | 478.40 | 548.51 |
| YoY % | +17.1% | +52.9% | +39.3% | -4.4% | +58.9% | +0.2% | +0.7% | +30.5% | +14.7% |
Stock 3 Year Rolling CAGR
| Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Average |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 8.94% | 11.53% | 10.55% | 0.78% | 3.80% | 13.27% | 9.95% | 8.20% | 8.38% |
| EBITDA | 9.72% | 8.68% | 13.78% | 3.57% | 3.05% | 14.10% | 9.41% | 9.05% | 8.92% |
| FCF | 11.51% | 11.71% | 13.25% | 4.44% | 5.08% | 15.72% | 10.31% | 12.31% | 10.54% |
| EPS | 10.09% | 19.96% | 19.23% | -0.31% | 2.63% | 18.32% | 13.39% | 11.11% | 11.80% |
| Price | – | 21.42% | 28.66% | 10.03% | 14.97% | 16.77% | 0.29% | 9.54% | 14.53% |
