In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Mastercard (NYSE:MA) alongside its primary competitors in the Financial Services industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on company's performance within 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 | 38.05 | 61.96 | 17.66 | 44.44% | $4.32 | $5.35 | 11.04% |
| Visa Inc | 29.76 | 14.12 | 16.27 | 12.62% | $6.45 | $7.13 | 9.57% |
| Fiserv Inc | 32.25 | 3.79 | 5.61 | 3.14% | $2.22 | $3.12 | 7.38% |
| PayPal Holdings Inc | 19.26 | 3.93 | 2.75 | 5.46% | $1.75 | $3.61 | 8.21% |
| Fidelity National Information Services Inc | 83.79 | 2.71 | 4.92 | 1.39% | $0.8 | $0.95 | 2.68% |
| Block Inc | 62.06 | 2.14 | 1.80 | 1.02% | $0.6 | $2.23 | 11.21% |
| Global Payments Inc | 18.10 | 1.12 | 2.58 | 1.68% | $1.08 | $1.63 | 4.74% |
| Corpay Inc | 24.06 | 8.36 | 6.35 | 8.38% | $0.51 | $0.77 | 2.9% |
| Jack Henry & Associates Inc | 34.83 | 7.21 | 6 | 5.58% | $0.18 | $0.23 | 4.73% |
| WEX Inc | 36.33 | 4.84 | 3.39 | 4.32% | $0.25 | $0.41 | 8.4% |
| Shift4 Payments Inc | 55.48 | 8.73 | 2.04 | 5.7% | $0.13 | $0.23 | 29.83% |
| Euronet Worldwide Inc | 17.06 | 3.62 | 1.27 | 6.76% | $0.18 | $0.41 | 5.02% |
| The Western Union Co | 7.20 | 9.04 | 0.98 | 33.62% | $0.24 | $0.4 | -8.85% |
| StoneCo Ltd | 10.40 | 1.25 | 1.60 | 3.29% | $1.13 | $2.25 | 11.86% |
| Payoneer Global Inc | 29.65 | 4.40 | 3.30 | 4.87% | $0.06 | $0.2 | 15.86% |
| PagSeguro Digital Ltd | 7.65 | 1 | 1.53 | 3.59% | $1.83 | $-0.02 | 6.74% |
| Paymentus Holdings Inc | 80 | 5.73 | 3.77 | 2.1% | $0.02 | $0.06 | 32.55% |
| DLocal Ltd | 20 | 5.67 | 3.77 | 10.06% | $0.06 | $0.07 | 6.29% |
| Evertec Inc | 32.59 | 4.53 | 2.87 | 6.44% | $0.09 | $0.11 | 26.88% |
| Average | 33.36 | 5.12 | 3.93 | 6.67% | $0.98 | $1.32 | 10.33% |
When conducting a detailed analysis of Mastercard, the following trends become clear:
At 38.05, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.14x, suggesting a premium valuation relative to industry peers.It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 61.96 which exceeds the industry average by 12.1x.
With a relatively high Price to Sales ratio of 17.66, which is 4.49x the industry average, the stock might be considered overvalued based on sales performance.
The Return on Equity (ROE) of 44.44% is 37.77% above the industry average, highlighting efficient use of equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.32 Billion, which is 4.41x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
The gross profit of $5.35 Billion is 4.05x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
With a revenue growth of 11.04%, which surpasses the industry average of 10.33%, the company is demonstrating robust sales expansion and gaining market share.
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.
When evaluating Mastercard alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
In terms of the debt-to-equity ratio, Mastercard has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 2.1.
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, gross profit, and revenue growth suggest strong operational performance and growth prospects relative to industry competitors. This combination of high valuation multiples and strong financial metrics positions Mastercard as a standout player in the sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.