In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Mastercard (NYSE:MA) in comparison to its major competitors within the Financial Services industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.
Mastercard Background
Mastercard is the second-largest payment processor in the world, having processed close to over $9 trillion in volume during 2023. Mastercard operates in over 200 countries and processes transactions in over 150 currencies.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Mastercard Inc | 35.96 | 58.06 | 16.56 | 42.49% | $3.92 | $4.83 | 10.44% |
| Visa Inc | 30.60 | 14.17 | 16.48 | 11.86% | $5.84 | $6.98 | 9.89% |
| Fiserv Inc | 28.10 | 3.04 | 4.68 | 2.51% | $1.96 | $2.88 | 7.39% |
| PayPal Holdings Inc | 14.66 | 2.94 | 2.09 | 4.25% | $1.56 | $3.46 | 9.36% |
| Fidelity National Information Services Inc | 104.15 | 2.31 | 4.45 | 3.9% | $0.8 | $0.92 | 2.92% |
| Block Inc | 105.48 | 2.06 | 1.71 | 2.51% | $0.51 | $2.09 | 19.38% |
| Global Payments Inc | 18.92 | 1.09 | 2.53 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 20.11 | 5.84 | 5.29 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 32.20 | 6.84 | 5.57 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 28.34 | 4.11 | 2.89 | 3.66% | $0.23 | $0.39 | 6.65% |
| Euronet Worldwide Inc | 18.81 | 3.93 | 1.43 | 2.1% | $0.09 | $0.32 | 8.87% |
| Shift4 Payments Inc | 47.83 | 6.78 | 1.63 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 7.15 | 10.28 | 1.01 | 32.55% | $0.24 | $0.41 | 1.18% |
| StoneCo Ltd | 12.18 | 1.31 | 1.71 | 2.52% | $0.9 | $2.14 | 15.45% |
| PagSeguro Digital Ltd | 11.16 | 1.42 | 2.13 | 3.57% | $1.77 | $0.2 | 10.15% |
| DLocal Ltd | 17.50 | 4.67 | 3.34 | 3.8% | $0.05 | $0.06 | 34.34% |
| Paymentus Holdings Inc | 77.09 | 5.01 | 3.43 | 1.66% | $0.02 | $0.05 | 24.64% |
| Evertec Inc | 34.07 | 4.28 | 3.01 | 2.9% | $0.07 | $0.1 | 28.47% |
| Payoneer Global Inc | 18.63 | 3.16 | 2.52 | 4.37% | $0.05 | $0.19 | 18.84% |
| Average | 34.83 | 4.62 | 3.66 | 5.48% | $0.88 | $1.27 | 13.45% |
By analyzing Mastercard, we can infer the following trends:
The Price to Earnings ratio of 35.96 for this company is 1.03x above the industry average, indicating a premium valuation associated with the stock.
With a Price to Book ratio of 58.06, which is 12.57x the industry average, Mastercard might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
With a relatively high Price to Sales ratio of 16.56, which is 4.52x the industry average, the stock might be considered overvalued based on sales performance.
The Return on Equity (ROE) of 42.49% is 37.01% above the industry average, highlighting efficient use of equity to generate profits.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.92 Billion is 4.45x above the industry average, highlighting stronger profitability and robust cash flow generation.
The gross profit of $4.83 Billion is 3.8x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
The company's revenue growth of 10.44% is significantly below the industry average of 13.45%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By analyzing Mastercard in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
Mastercard is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 2.16.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For Mastercard, the PE, PB, and PS ratios are all high compared to its peers in the Financial Services industry, indicating potential overvaluation. On the other hand, Mastercard's high ROE, EBITDA, and gross profit suggest strong profitability and operational efficiency relative to industry competitors. However, the low revenue growth rate may raise concerns about the company's ability to sustain its financial performance in the long term.
This article was generated by Benzinga's automated content engine and reviewed by an editor.