Mastercard Inc.’s (NYSE: MA) fourth-quarter and full-year results beat on both the top and bottom line. The stock price was up as much as 1.4% in pre-market trade but erased some of those gains during the regular session.
Non-GAAP EPS for the fourth quarter came in at $1.96, 9 cents ahead of estimates. GAAP EPS of $2.07 were up 137% from a year earlier and 19 cents ahead of estimates. Net income rose 134% year on year to $2.1 billion.
Quarterly revenues were $4.41 billion, up 16% from a year earlier and $10 million ahead of consensus.
Gross dollar volumes rose 12% to $1.7 trillion while cross border volume rose 16%. In addition to strong revenue growth, the company managed to record a 23% drop in operating costs. As a result, the operating margin rose from 32.4% a year ago to 54.4%.
Revenue Growth Expected to Continue Through 2020
For the full year, Mastercard earned net revenues of $16.9 billion, a 13% increase over 2018’s revenue. Net income grew 39% to $8.1 billion while EPS increased 42% to $7.94.
Just over 26 million shares were repurchased during the year or about 2.5% of outstanding shares. Dividends worth $1.3 billion were paid during the year.
Mastercard’s management team sees net revenue growth in the low teens over the next 12 months. They see operating expenses growing at just below 10%.
Solid Results were Expected
These results are very good, but the stock has been priced for strong numbers. Mastercard has been trading at a historically high valuation over the last year and will need to maintain the earnings momentum to justify the price tag. The stock has also been upgraded by several analysts over the past month, with several reiterating their calls on Wednesday.
All eyes are now on Visa (NYSE: V) which reports on Thursday. Mastercard’s stock price has outperformed over the last 12 months and Visa’s results may determine whether or not that outperformance continues.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.