Today I will take a look at Mastercard Incorporated’s (NYSE:MA) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the it services industry performed. As an investor, I find it beneficial to assess MA’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for MA
Did MA’s recent EPS Growth beat the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to examine many different companies on a more comparable basis, using new information. For Mastercard, the most recent earnings is $4,621.0M, which compared to the previous year’s level, has risen by 15.07%. Given that these values are fairly nearsighted, I’ve determined an annualized five-year figure for Mastercard’s net income, which stands at $3,166.6M. This means on average, Mastercard has been able to consistently improve its bottom line over the last couple of years as well.
How has it been able to do this? Let’s take a look at whether it is merely a result of industry tailwinds, or if Mastercard has seen some company-specific growth. In the past few years, Mastercard expanded its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US it services industry has been growing, albeit, at a unexciting single-digit rate of 4.86% over the past year, and a substantial 12.19% over the previous few years. This suggests that any recent headwind the industry is facing, the impact on Mastercard has been softer relative to its peers.
What does this mean?
Though Mastercard’s past data is helpful, it is only one aspect of my investment thesis. While Mastercard has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Mastercard to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MA’s future growth? Take a look at our free research report of analyst consensus for MA’s outlook.
2. Financial Health: Is MA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.