MasterCard Earnings Preview: Crowd & Experts Expect 10% EPS Growth

Mastercard Inc MA is scheduled to report its first quarter financial results on Wednesday, before the market opens.

According to Estimize, both experts and the crowd expect to see EPS growth of approximately 10 percent. In the same quarter last year, the company recorded EPS of $0.73, while last quarter, EPS came in at $0.69. For the first quarter of 2015, the crowd projects consensus EPS of $0.82 on revenue of $2.331 billion, while the Street models consensus EPS of $0.80 on revenue of $2.29 billion.

It should be noted, however, that Mastercard has a history of not meeting estimates. Usually, results come in above projections. The graph below provides a view of how estimates and results have differed in the last eight quarter.

It is also possible to check out how estimates have changed over time.

The graph above evidences how consensus has fallen as the earnings date loomed. Although they both started of from the same point (EPS of $0.84) in January, the Street rapidly became more bearish than the crowd.

What Analysts Are Saying

In a recent report, Jefferies analyst Jason Kupferberg said Mastercard (as well as Visa) will likely see incremental foreign exchange headwinds (driven by a strong US Dollar) reflected in its upcoming earnings report.

“On the other hand, gas prices further declined in the quarter and as gas represents roughly 7 to 8 percent of total U.S. volume for both networks, creating further pressure on the companies. The analyst stated that declining gas prices was the most negative leading indicator he observed at a time when consumer confidence improved,” a Benzinga article reads.

Despite the headwinds, MasterCard remains Buy rated at Jefferies, with an unaltered $98 price target.

For its part, Credit Suisse rates MasterCard Outperform, with a $100 price target. The firm expects first quarter EPS of $0.77. "We forecast 1Q net revenue of $2.3Bn, up 5% y/y and down 5% q/q, and gross revenue of $3.1Bn, up 7% y/y and down 7% q/q. We expect R&I will represent 26.2% of gross revenues, compared to 27.9% in 4Q14 and 25.2% in 1Q14. We forecast revenue from domestic assessments of $0.95Bn (+1% y/y and -7% q/q), cross border volume fees of $0.72Bn (+4% q/q and -7%), and transaction processing fees of $1.01Bn (+8% y/y and -5% q/q). Most of the volume corrosion from loss of the Chase contract is expected to occur in 1Q15," the analysts held.