Performance Comparison: Mastercard And Competitors In Financial Services Industry

In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Mastercard MA against its key competitors in the Financial Services industry. By examining key financial metrics, market position, and growth prospects, we aim 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 $8 trillion in transactions during 2022. 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 39.32 62.63 17.53 42.16% $3.67 $5.02 12.57%
Visa Inc 31.98 14.15 17.23 12.46% $6.48 $6.97 8.8%
Fiserv Inc 29.11 2.91 4.68 2.93% $2.15 $3.08 0.9%
PayPal Holdings Inc 15.33 3 2.19 6.87% $2.14 $3.67 8.71%
Global Payments Inc 36.86 1.56 3.77 1.62% $1.05 $1.56 8.33%
Fleetcor Technologies Inc 20.63 5.99 5.39 8.07% $0.51 $0.74 -3.46%
Jack Henry & Associates Inc 34.29 7.40 5.92 5.43% $0.17 $0.22 7.99%
WEX Inc 35.03 5.07 3.67 4.83% $0.22 $0.41 1.83%
StoneCo Ltd 27.65 1.93 2.51 2.94% $0.9 $2.18 25.35%
Euronet Worldwide Inc 19.94 4.05 1.53 5.79% $0.15 $0.36 -4.61%
DLocal Ltd 37.02 11.20 8.88 9.84% $0.1 $0.07 46.54%
Shift4 Payments Inc 45.72 11.31 2.12 8.62% $0.11 $0.18 23.41%
The Western Union Co 7.62 9.37 1.09 23.25% $0.22 $0.4 -4.14%
PagSeguro Digital Ltd 13.62 1.63 2.41 3.23% $1.68 $0.24 -0.99%
Evertec Inc 27.13 5.06 4.06 1.88% $0.03 $0.09 18.79%
Paymentus Holdings Inc 154.54 4.84 3.49 1.54% $0.01 $0.05 18.94%
Payoneer Global Inc 35.93 3.06 2.60 2.03% $0.04 $0.18 30.91%
Average 35.77 5.78 4.47 6.33% $1.0 $1.27 11.71%

Through a meticulous analysis of Mastercard, we can observe the following trends:

  • The Price to Earnings ratio of 39.32 for this company is 1.1x above the industry average, indicating a premium valuation associated with the stock.

  • The elevated Price to Book ratio of 62.63 relative to the industry average by 10.84x suggests company might be overvalued based on its book value.

  • The stock's relatively high Price to Sales ratio of 17.53, surpassing the industry average by 3.92x, may indicate an aspect of overvaluation in terms of sales performance.

  • With a Return on Equity (ROE) of 42.16% that is 35.83% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

  • The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.67 Billion, which is 3.67x above the industry average, implying stronger profitability and robust cash flow generation.

  • The company has higher gross profit of $5.02 Billion, which indicates 3.95x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 12.57% exceeds the industry average of 11.71%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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 evaluating Mastercard against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

  • Mastercard falls in the middle of the list when considering the debt-to-equity ratio.

  • This indicates that the company has a moderate level of debt relative to its equity with a debt-to-equity ratio of 2.26, suggesting a balanced financial structure with a reasonable debt-equitymix.

Key Takeaways

Mastercard's high PE, PB, and PS ratios indicate that the company is trading at a premium compared to its peers in the Financial Services industry. This suggests that investors are willing to pay a higher price for Mastercard's earnings, book value, and sales. On the other hand, Mastercard's high ROE, EBITDA, gross profit, and revenue growth ratios highlight the company's strong financial performance and growth potential relative to its industry peers. These ratios indicate that Mastercard is generating higher returns on equity, profitability, and revenue growth compared to its competitors in the Financial Services sector.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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