Mastercard is a
global leader in electronic payments serving as a processor, franchisor and
advisor to approximately 25,000 financial institutions for their credit, debit
and other payment programs. In addition,
it manages a family of payment card brands (Mastercard, Mastercard Electronic,
Maestro, Cirrus). Importantly, MA does
not extend credit; it simply acts as a toll collector and is paid on both transaction
volume and dollar volume. The company
earns in excess of a 25% return on equity and has grown profits from $.18 in
2004 to $2.56 in 2013 and its dividend
from $.01 in 2006 to $.29 in 2013.
The company should continue to grow as a result of:
(1) the global shift in the
payments industry from paper to electronics,
(2) acquisitions,
(3) innovation in its product
portfolio [e-commerce, mobile commerce, pre-paid cards],
(4) a continuing stock buyback
program.
Negatives:
(1)the global credit crisis has
impacted growth negatively,
(2) difficulty controlling costs
in a rapidly expanding business,
(3) lawsuits involving currency
conversions and antitrust,
(4) tough regulatory environment.
Mastercard is rated A++ by Value
Line, it has a 75 debt to equity ratio and its stock provides a .6% yield.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2006
MA .6% 11%
7% 4*
Ind Ave 2.1 9 29 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
MA 0% 42% 0 38% A++
Ind Ave 33 19 NA 18 NA
*MA has only paid a dividend for 8
years
Chart
Note:
MA stock made great progress off its January 2009 low, quickly surpassing the downtrend
off its June 2008 high (straight red line) and the November 2008 trading high
(green line). Early this year, it broke
below the lower boundaries of both its intermediate term and long term uptrends,
re-setting to trading ranges (long term---blue; intermediate
term---purple). This appears to be more
of a consolidation process versus rolling over.
The wiggly red line is the 50 day moving average. The Aggressive Growth Portfolio owns an 85%
position in MA. The upper boundary of
its Buy Value Range is $70; the lower boundary of its Sell Half Range is $119.
No comments:
Post a Comment