In the dynamic 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 MA and its primary competitors in the Financial Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for 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 | 34.39 | 56 | 15.96 | 44.44% | $4.32 | $5.35 | 11.04% |
| Visa Inc | 27.46 | 13.03 | 15.02 | 12.62% | $6.45 | $7.13 | 9.57% |
| Fiserv Inc | 27.17 | 3.19 | 4.73 | 3.14% | $2.22 | $3.12 | 7.38% |
| PayPal Holdings Inc | 15.23 | 3.11 | 2.17 | 5.46% | $1.75 | $3.61 | 8.21% |
| Fidelity National Information Services Inc | 75.69 | 2.45 | 4.44 | 1.39% | $0.8 | $0.95 | 2.68% |
| Block Inc | 53.75 | 1.85 | 1.56 | 1.02% | $0.6 | $2.23 | 11.21% |
| Global Payments Inc | 18.25 | 1.13 | 2.60 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 19.64 | 6.90 | 5.18 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 32 | 6.80 | 5.54 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 29.27 | 3.90 | 2.73 | 4.32% | $0.25 | $0.41 | 8.4% |
| Euronet Worldwide Inc | 16.73 | 3.55 | 1.25 | 6.76% | $0.18 | $0.41 | 5.02% |
| Shift4 Payments Inc | 42.35 | 6 | 1.44 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 6.99 | 8.79 | 0.96 | 33.62% | $0.24 | $0.4 | -8.85% |
| StoneCo Ltd | 13.36 | 1.44 | 1.88 | 2.52% | $0.9 | $2.14 | 15.45% |
| PagSeguro Digital Ltd | 12.14 | 1.54 | 2.32 | 3.57% | $1.77 | $0.2 | 10.15% |
| Payoneer Global Inc | 23.96 | 3.61 | 2.76 | 4.37% | $0.05 | $0.19 | 18.84% |
| Paymentus Holdings Inc | 81.96 | 5.33 | 3.64 | 1.66% | $0.02 | $0.05 | 24.64% |
| DLocal Ltd | 16.75 | 4.47 | 3.20 | 3.8% | $0.05 | $0.06 | 34.34% |
| Evertec Inc | 30.69 | 4.26 | 2.70 | 6.44% | $0.09 | $0.11 | 26.88% |
| Average | 30.19 | 4.52 | 3.56 | 5.95% | $0.95 | $1.31 | 12.14% |
Upon a comprehensive analysis of Mastercard, the following trends can be discerned:
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The Price to Earnings ratio of 34.39 for this company is 1.14x above the industry average, indicating a premium valuation associated with the stock.
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With a Price to Book ratio of 56.0, which is 12.39x 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.
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With a relatively high Price to Sales ratio of 15.96, which is 4.48x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 44.44% that is 38.49% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.32 Billion, which is 4.55x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $5.35 Billion, which indicates 4.08x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 11.04% is significantly below the industry average of 12.14%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 considering the Debt-to-Equity ratio, Mastercard can be compared to its top 4 peers, leading to the following observations:
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Mastercard is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 2.1.
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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 industry peers, indicating potentially overvalued stock. On the other hand, Mastercard's high ROE, EBITDA, and gross profit suggest strong profitability and operational efficiency. However, the low revenue growth rate may raise concerns about future performance compared to industry competitors in the Financial Services sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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