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Mastercard Incorporated (MA) Q4 Earnings Preview: Charging Higher

 January 29, 2013 01:14 PM

(By Rich Bieglmeier) MasterCard Incorporated (MA) is scheduled to report earnings before the market open on Thursday, January 31, 2013. The company will host a conference call to discuss these results at 9:00 a.m. Eastern Time. Wall Street anticipates that MA will earn $4.82 for its fourth quarter. iStock expects the consumer credit company to report earnings that will exceed Wall Street's consensus number. The iEstimate is $4.87 –  a 5 cents upside surprise.

MasterCard Incorporated, a payments and technology company, together with its subsidiaries, provides transaction processing and other payment-related services in the United States and internationally.

[Related -Mastercard Inc (MA) Q3 Earnings Preview: What To Expect?]

The business services company has surpassed the Street's consensus 15 of the last 16 quarters by an average of 8.30. The one miss, 12 quarters ago, fell short by only 1.62%. While MA has made easy work of Wall Street's forecasts, the stock has price performance in the days surrounding earnings has been mixed. Shares gained an average of 7.36% the nine times the price went green. The unlucky seven occasions of underwater red, MA dipped 5.34% on average.

Consumer borrowing and credit rating trends hint at a good mix for MasterCard Thursday quarterly checkup. According to Car Hub's Q4 Credit Card Landscape Report, incentive offers are falling, rates are rising slightly, and complaints are down.

Overall, the average interest rate for non-secured credit is up 1.036% from the third to the fourth quarter (QoQ), and 1.288% year-over-year. At the same time, the Federal Reserve reports consumer credit increased by 1% at the end of November versus the end of September. That might not sound like much, but when you consider the totals, it is fairly large. At the end of Q3, the Fed says Consumer Credit Outstanding stood at $2,723.2 trillion; at the end of November, $2,751.8 trillion.

[Related -VeriFone Systems Inc (PAY): Buy This Leader In Mobile Payments On Its 55% Pullback]

Revolving debt, i.e. credit cards ended November at $1.668 trillion compared to $1.644 trillion at the end of November. The scary thing is that the numbers do not include most of the holiday shopping binge.

It's fairly clear that the average consumer is busting out the plastic once again. At the same time, Credit Hub says fees are up 11.93% from last year and 0.42% from the third quarter. Meanwhile, complaints and delinquencies are down, late payment down 14% according to the latest data, which means should mean less bad debt and fewer charges for lending agencies.

Overall, an increase in borrowing by consumers, higher fees and interest rates for credit, plus lower incentives and expenses by way of delinquent payers should add up to a solid quarter for credit card companies like MasterCard Incorporated (MA).



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