Post Earnings Coverage as MasterCard Tops Market Expectation on Increased Card Spending
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LONDON, UK / ACCESSWIRE / July 29, 2016 / Active Wall St. announces its post-earnings coverage on MasterCard Inc. (NYSE: MA). The company reported second quarter fiscal 2016 earnings before the opening bell on July 28, 2016, with profit beating analysts' estimates as customer card transactions increased on its network. Register with us now for your free membership at: http://www.activewallst.com/register/.
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For the quarter ended on June 30, 2016, the world's second-largest payments network, MasterCard, saw its net income jumped 6.7% to $983 million, or $0.89 per share, up from $921 million, or $0.81 per share, in the year earlier period. Excluding certain items, earnings per share rose 13% on y-o-y basis to $0.96 per share. Analysts expected earnings of $0.90 per share on $2.59 billion in revenue. Revenue rose 13% to $2.69 billion beating the $2.59 billion estimate.
President and CEO Ajay Banga highlighted: “We carried solid momentum into the second quarter, delivering 14% revenue growth for the first half of the year, after adjusting for currency.”
The company's results are in line with its payment processing counterparts. The biggest payment network, Visa Inc. reported better than expected earnings on July 21, 2016, as transaction volume climbed 10.2%, beating Wall Street expectations.
On the other hand, another rival, American Express Co., stated that its quarterly profit surged 37% to $2.01 billion.
Increased Card Shopping
Purchase, New York headquartered MasterCard's earnings were primarily driven by increasing transaction and purchase volumes. The company said that transactions jumped 14% during Q2 FY16, however this was partly offset by higher rebates and incentives as customers now seek better rewards, with merchants continuing to demand improved terms, compelling card networks and banks to sweeten terms on fees and rewards.
During Q2 FY16, MasterCard's worldwide purchase volume rose 9% to $897 billion on a local currency basis. U.S. volume increased 8.1% to $335 billion. MasterCard's cross-border volumes - the value of transactions made by card holders outside the card-issuer's country - jumped 10%.
With more people looking to replace cash and checks with digital payments. MasterCard has begun investing in payments technology beyond the plastic cards. MasterCard is expanding from the traditional plastic cards as customers move towards digital formats. It is also overhauling its Masterpass digital payment platform which allows consumers to use the service on their handsets at store check-out terminals, like other digital platforms such as Apply Pay.
Expanding Overseas Presence
On July 22, 2016, MasterCard announced that it has entered into a definitive agreement to pay 700 million pounds ($921 million) for a controlling stake in U.K.-based payments firm VocaLink Holdings Ltd that handles most of the country's employer payroll deposits and consumer bill payments. The deal, MasterCard's biggest since going public in 2006, will provide the company a bigger foothold in Britain.
Share Repurchase
During Q2 FY16, MasterCard repurchased approximately 5 million shares of Class A common stock at a cost of $462 million. This leaves the company with a remainder of $2.7 billion under the current repurchase program authorization.
Stock Performance
Following the earnings release, MasterCard's shares gained 2.41% to close yesterday's trading session at $96.41, with a total of 5.21 million shares changing hands. MasterCard stock price has gained 6.41% in the past one month.
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