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Why MasterCard Shares May Outperform Visa

(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of V and MA.)

Shares of MasterCard Inc. (MA) have sped ahead of Visa Inc. (V) over the past year, rising by over 53% compared to 40% for Visa. MasterCard's stock has shar൲ply lagged its financial rival since early March, aided by Visa's strong earnings report on April 25. But MasterCard's shares are poised to regain the lead and outperform over the next year as the payment 🤪processor reports what are expected to be robust results on May 2.

Analysts are looking for MasterCard's earnings to rise over 23% to $1.24 per share, while revenue is seen jumping by 19% to $3.25 billion, in the first quarter. MasterCard historically reports results that come in ahead of estimates. Since the fourth quarter of 2015, MasterCard has only missed revenue estimates two times, while earnings have yet to disappoint. (For related reading, see also: MasterCard Sees Double-Digit Gains in Q1 Earnings.)

V Chart

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Strong Numbers

Analysts are looking for MasterCard earnings to soar this quarter, at an even faster pace than what Visa forecasts had been. MasterCard has a history of topping earnings estimates by a wide m🍌argin. In fact, over the past nine quarters, MasterCard has beaten ear༺nings estimates by an average of about 6.3%, while revenue has also beaten estimates by nearly 2.25% on average. It gives MasterCard a good shot at producing a better growth than even Visa. 

V Quarterly Actual EPS Chart

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Visa's Strong Results

The prominent growth numbers analysts are forecasting for MasterCard should come as no surprise, especially given Visa's latest set of quarterly results. Analysts had been looking for Visa's earnings to grow by 18.6% in its fiscal second quarter; instead, Visa reported earnings that were more than 9% better than expectations, providing a growth rate of nearly 29% versus last year. Over the past nine quarters, Visa has beaten analysts' earnings estimates by just over 7% on average, while revenue has topped estimates by approximately 2.75% on average. 

V Quarterly Revenue Estimates Chart

data by YCharts

Bullish Analysts

Analysts are incredibly bullish on shares of MasterCard with 97% of the 36 analysts covering the stock rating shares a "buy" or "outperform." The average price target on the stock is currently $195.29, nearly 10% higher than the stock's current price. 

Technicals Suggest a Breakout Is Coming

Technicals show shares of MasterCard are in the process of breaking out, and should shares rise above a downtrend currently around $178 to $180, then shares of the stock could be poised to increase to nearly $195. Visa's chart had a similar set up going into its results, followed by a post-earnings breakout. (For more, see also: 澳洲幸运5官方开奖结果体彩网:Visa’s Breakout May Boost Stock by 10%.)

With earnings of MasterC♐ard quickly approaching shares of the stock appear poised to continue outperforming. Now the company will need to report strong numbers, and provide even better guid🔯ance to keep its shares rising. 

Michael Kramer is the Founder of , a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Cl🌳ick here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

 

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