Mastercard Incorporated (MA) Shares: Are They Risky Or Cheap?

Mastercard Incorporated (NYSE:MA) finished Tuesday with an addition of $5.48 to close at $348.69, an upside of 1.60 percent. An average of 5,191,600 shares of common stock have been traded in the last five days. There was a fall of -$4.50 in the past week. The last 20 days have seen an average of 4,062,405 shares traded, while the 50-day average volume stands at 3,863,090.

MA stock has increased by 1.15% in the last month. The company shares reached their 1-month lowest point of $335.62 on 09/20/21. With the stock rallying to its 52-week high on 04/28/21, shares of the company touched a low of $281.20 and a high of $401.50 in 52 weeks. In spite of this, the price is down -13.15% from the 52-week high.


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Insider Transactions

52 days have passed since Mastercard Incorporated (MA) last reported insider trading activity. Mastercard Foundation, who is 10% Owner, most recently acquired $78,985 shares at $358.90 per share on Aug 16. In this transaction, the insider spent $28,348,025. 10% Owner, Mastercard Foundation, disposed of 78,973 shares at a price of $361.70 on Aug 13. The insider now owns more than $28,564,732 worth of shares. Prior to that, 10% Owner Mastercard Foundation went on to Sale 78,973 shares at $360.73 each on Aug 12. An amount of $28,488,254 was transacted.

Valuation Metrics

Mastercard Incorporated (MA) has a trailing price-to-earnings (P/E) ratio of 48.42, which compares with the 14.40 for the broader industry and 12.73 for the sector. This means investors are optimistic about the stock’s future prospects. In the last five years, Mastercard Incorporated’s PE ratio has ranged between 60.59 and 25.60. The stock’s beta is 1.13. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 19.96, the price-to-book (PB) ratio at 53.56, and the price-to-cash flow ratio at 58.47.

Mastercard Incorporated pays a $1.76 dividend per share annually. It offers a dividend yield of 0.50%. The company has a payout ratio of 23.30%. The company’s most recent quarterly dividend payment was $0.44 a share, without any change from last year. Its dividend has been increased for the last 7 consecutive years with the latest increase dividend $0.04 reported on Tuesday December 8 2020. Dividends have grown by 81.82% each year over the last three years.

Mastercard Incorporated will next go ex-dividend on 7-Oct-2021. The next dividend payment Mastercard Incorporated will make is expected to be $0.44.

The quick ratio of Mastercard Incorporated for the three months ended June 29 was 1.30, and the current ratio was 1.30, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 2.06 and a total debt to equity ratio of 2.16 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin 5-year average of 78.1%. Mastercard Incorporated’s EBITDA margin for the year ending June 29 is 57.62%, while its operating margin for the same period stands at 52.30%. Its gross profit as reported stood at $7.22 billion compared to revenue of $15.3 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Mastercard Incorporated’s return on assets was 21.30%, compared to 23.7% over the last five years. In the past year, the return on investment has been 35.30%, and the 5-year average is 46.8%. Meanwhile, the return on equity (ROE) for the past 12 months has been 115.30% and the 5-year average holds at 99.2%. For the broader industry, ROE averaged 16.40 over the past year.

Earnings Surprise

For the three-month period that ended June 29, Mastercard Incorporated had $1.81 billion in cash. The analyst consensus anticipated Mastercard Incorporated’s latest quarter earnings to come in at $1.75 per share, but it turned out to be $1.95, a 11.40% surprise. For the quarter, EBITDA amounted to $2.84 billion. Shareholders own equity worth $986.77 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Mastercard Incorporated (MA) price momentum. RSI 9-day as of the close on 05 October was 49.22%, suggesting the stock is Neutral, with historical volatility in this time frame at 34.33%.

As of today, MA’s price is $348.79 -1.27% or -$4.50 from its 5-day moving average. MA is currently trading -0.67% lower than its 20-day SMA and -4.18% lower than its 100-day SMA. However, the stock’s current price level is -10.65% below the SMA50 and +2.46% above the SMA200.

The stochastic %K and %D were 35.37% and 46.54%, respectively, and the average true range (ATR) was 9.13. With the 14-day stochastic at 47.42% and the average true range at 8.41, the RSI (14) stands at 48.34%. The stock has reached -6.11 on the 9-day MACD Oscillator while the 14-day reading was at -3.27.

Analyst Ratings

Daiwa Securities downgraded Mastercard Incorporated (NYSE: MA) to a a Neutral rating in its most recent analyst report. Previously, the stock was rated as a an Outperform.The consensus rating for Mastercard Incorporated (MA) among analysts is Overweight. According to current brokerage recommendations, 0 brokerage firms advise that investors sell MA, while 7 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 5 analysts, while 25 others rate it as a “buy”.

What is MA’s price target for the next 12 months?

Analysts predict a range of price targets between $385.00 and $482.00, with a median target of $447.50. Taking a look at these predictions, the average price target given by analysts for Mastercard Incorporated (MA) stock is $438.90.

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