Mastercard’s Q3 Earnings Report will be released on October 27, 2022. Given the prior quarter’s results, which surpassed Wall Street projections, the business is poised to establish another record.
Excluding unusual events, Q2 adjusted net sales rose by 27% and adjusted operating income increased by 40% year over year. Operating expenditures climbed by 12%, with acquisitions accounting for a 5% rise. Operating income increased by 40%, despite a one-point decline due to acquisitions [1].
The 27% rise in net revenue was largely driven by domestic and cross-border transaction and volume growth, and also service expansion, which was offset in part by growth in rebates and incentives. EPS increased 40% yearly to $2.56, including a $0.05 contribution from stock buybacks. The company repurchased $2.4 billion in stock during the quarter and an additional $448 million until July 25, 2022 [2].
The company looks for a solid Q3 as it expects net revenue to climb at the high end of the high teens, excluding acquisitions [3].
During the Q2 report call, Sachin Mehra, Chief Financial Officer, said, “From an operating expense standpoint, we expect Q3 operating expenses to grow at the high end of a low double-digit rate versus a year ago on a currency-neutral basis, excluding acquisitions and special items.” The company also mentioned that given the current interest rates, they have an expense run rate of around $115 million each quarter on the other income and cost line. It excludes equity investment gains and losses, which are excluded from our non-GAAP measurements. The company anticipates a 19% to 21% tax rate in Q3. In Q4, we anticipate a tax rate of around 19% [4].
Analyst forecasts for Q3 2022 earnings per share range from 2.37 to 2.68 with a consensus estimate of 2.58, whereas forecasts for Q3 2022 sales range from 5.5B to 5.8B with a consensus estimate of 5.7B. Recently, the company introduced Crypto Source, which will help financial institutions in offering crypto trading [5].
Mastercard will serve as a “bridge” between Paxos, a cryptocurrency trading platform that PayPal presently uses to offer a similar service, and banks.
According to the company, its duty is to keep banks in compliance with regulations by following crypto compliance requirements, authenticating transactions, and providing anti-money-laundering and identity monitoring services.
#Mastercard Stock Analysis
2022 has been rough. After gaining a high of 399.92, it reached a low of 276.87 in the second week of October. The price is currently down almost 30% from highs. The price is below the 200-day MA on the daily chart, and the RSI is near the neutral level.
The next resistance for Mastercard lies around 314.98. If it crosses this level, the stock could reach 339.48, the level it achieved on September 12. On the flip side, the stock’s support lies around 264.19. If the price breaches this level, it could further dip towards 249.67 [6].
- https://investor.mastercard.com/financials-and-sec-filings/quarterly-results/default.aspx
- https://investor.mastercard.com/financials-and-sec-filings/quarterly-results/default.aspx
- https://investor.mastercard.com/financials-and-sec-filings/quarterly-results/default.aspx
- https://investor.mastercard.com/financials-and-sec-filings/quarterly-results/default.aspx
- https://www.mastercard.com/news/press/2022/october/mastercard-to-bring-crypto-trading-capabilities-to-banks/
- https://finance.yahoo.com/quote/MA?p=MA&.tsrc=fin-srch
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Adnan Rehman
Market Analyst
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