Mastercard Inc. (NYSE: MA) is scheduled to release its first quarter 2011 earnings on May 3. The company, which issues a range of credit, debit and pre-paid cards, is expecting to see its revenue boosted as consumer spending improves globally. However, regulators in the United States are pushing for new rules that seek to limit the amount card providers like Mastercard, Visa and Amex charge per transaction on their debit cards. The passing of such regulation could hamper top-line growth for card issuers in subsequent quarters of 2011.
In Q42010:
- Mastercard reported net revenue of $1.44 billion, a 10.7 percent increase over the $1.3 billion it posted in Q4 2009. On a constant currency basis, net revenue increased 13 percent compared with the same period in 2009.
- Operating expenses were up 4.6 percent year-over-year, mainly due to a 6.8 percent increase in advertising and marketing costs.
- Net income totalled $415 billion, an increase of over 41 percent from the $294 million it reported in the corresponding quarter of 2009. Earnings per share for the quarter were reported at $3.17, compared with $2.25 in Q4 2009.
For the fiscal year 2010, net revenue increased 8.6 percent versus 2009, and came in at $5.5 billion. The company managed to lower its operating expenses by 1.8 percent for the full year 2010 compared with 2009. Mastercard reported full year net income of $1.85 billion, compared with $1.46 billion in 2009. Earnings per share were $14.10, compared with $11.2 in 2009.
For this quarter, Mastercard is expected to earn between $3.74 and $4.28 per share, with a consensus estimate of $4.06, and a coefficient variance of 2.62. Revenue for the quarter is expected to be $1.5 billion, compared with $1.3 billion it reported in the first quarter of 2010. The company recently completed the acquisition of the prepaid card program management business of Travelex, boosting its global prepaid card operations. The acquisition came at a cost of $458 million, paid for in cash. Investors will be closely watching developments in the proposed overhaul of the regulatory environment for card issuers. The debit-card fee cap, if imposed, would greatly limit the amount that card companies charge merchants and retailers for use of their facilities. Mastercard Inc. is currently trading at a price of $275.89, and has a 52 week range of $191.00 to $278.10. The stock has a target price of $290.50, with a mean recommendation of Overweight.