In-Depth Analysis: Mastercard Versus Competitors In Financial Services Industry

Benzinga - by Benzinga Insights, Benzinga Staff Writer.

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Mastercard (NYSE: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.

CompanyP/EP/BP/SROEEBITDA (in billions)Gross Profit (in billions)Revenue Growth

Mastercard Inc	40.48	64.47	18.05	42.16%	$3.67	$5.02	12.57%
Visa Inc	32.91	14.56	17.73	12.46%	$6.48	$6.97	8.8%
Fiserv Inc	29.71	2.93	4.77	2.93%	$2.16	$3.08	6.18%
PayPal Holdings Inc	15.69	3.07	2.24	6.87%	$2.14	$3.67	8.71%
Block Inc	3921	2.58	2.20	0.98%	$0.15	$2.03	24.13%
Fidelity National Information Services Inc	78.67	2.02	4.02	1.3%	$0.66	$0.97	-0.59%
Global Payments Inc	34.50	1.46	3.53	1.59%	$0.99	$1.51	8.03%
Fleetcor Technologies Inc	20.88	6.06	5.46	8.07%	$0.51	$0.74	-3.46%
Jack Henry & Associates Inc	33.94	7.33	5.86	5.43%	$0.17	$0.22	7.99%
WEX Inc	35.44	5	3.71	4.83%	$0.27	$0.41	7.21%
StoneCo Ltd	27.13	1.90	2.46	2.94%	$0.9	$2.18	25.35%
Shift4 Payments Inc	50.83	12.58	2.35	8.62%	$0.11	$0.18	23.41%
Euronet Worldwide Inc	19.82	3.99	1.53	5.79%	$0.15	$0.36	10.63%
DLocal Ltd	36.93	11.17	8.86	9.84%	$0.1	$0.07	46.54%
The Western Union Co	7.82	9.39	1.12	23.25%	$0.22	$0.4	-3.63%
PagSeguro Digital Ltd	14.15	1.70	2.50	3.23%	$1.68	$0.24	-0.99%
Evertec Inc	26.77	5	4.01	1.88%	$0.03	$0.09	18.79%
Paymentus Holdings Inc	147.17	4.61	3.32	1.54%	$0.01	$0.05	18.94%
Payoneer Global Inc	29.80	2.51	2.03	2.03%	$0.04	$0.18	30.91%
Average	253.51	5.44	4.32	5.75%	$0.93	$1.3	13.16%

table { width: 100%; border-collapse: collapse; font-family: Arial, sans-serif; font-size: 14px; }

th, td { padding: 8px; text-align: left; }

th { background-color: #293a5a; color: #fff; text-align: left; }

tr:nth-child(even) { background-color: #f2f4f8; }

tr:hover { background-color: #e1e4ea; }

td:nth-child(3), td:nth-child(5) { text-align: left; }

.dividend-amount { font-weight: bold; color: #0d6efd; }

.dividend-frequency { font-size: 12px; color: #6c757d; } Upon analyzing Mastercard, the following trends can be observed:

• The stock's Price to Earnings ratio of 40.48 is lower than the industry average by 0.16x, suggesting potential value in the eyes of market participants.

• With a Price to Book ratio of 64.47, which is 11.85x 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.

• The stock's relatively high Price to Sales ratio of 18.05, surpassing the industry average by 4.18x, may indicate an aspect of overvaluation in terms of sales performance.

• The company has a higher Return on Equity (ROE) of 42.16%, which is 36.41% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.67 Billion, which is 3.95x above the industry average, indicating stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $5.02 Billion, which indicates 3.86x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 12.57%, which is much lower than the industry average of 13.16%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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 holds a middle position in terms of the debt-to-equity ratio compared to its top 4 peers.

• This indicates a balanced financial structure with a moderate level of debt and an appropriate reliance on equity financing with a debt-to-equity ratio of 2.26.

Key Takeaways For Mastercard, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is high, suggesting investors are willing to pay a premium for its assets. The PS ratio is also high, reflecting strong revenue generation relative to market value. In terms of ROE, EBITDA, and gross profit, Mastercard demonstrates high profitability and operational efficiency. However, the low revenue growth rate may raise concerns about future performance compared to industry peers 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.

Read the original article on Benzinga