Mastercard is a global leader in electronic payments serving
as a processor, franchisor and advisor to approximately 25,000 financial
institutions for their credit, debit and other payment programs. In addition, it manages a family of payment
card brands (Mastercard, Mastercard Electronic, Maestro, Cirrus). Importantly, MA does not extend credit; it
simply acts as a toll collector and is paid on both transaction volume and
dollar volume. The company earns in
excess of a 25% return on equity and has grown profits from $1.76 in 2004 to $21.94
in 2012 and its dividend from $.09 in
2006 to $1.20 in 2012. While the
2008-2009 pullback in global consumer spending impacted the gross dollar volume
of transactions, the company continued to grow; further improvement should come
as a result of:
(1) the global shift in the payments industry from paper to
electronics,
(2) MA expands outside the US ,
(3) innovation in its product portfolio [e-commerce, mobile
commerce, pre-paid cards],
(4) a continuing stock buyback program.
Negatives:
the global credit crisis has impacted growth negatively,
difficulty controlling costs in a rapidly expanding
business,
lawsuits involving currency conversions and antitrust,
tough regulatory environment.
Mastercard is rated A++ by Value Line, it has no debt and
its stock provides a .4% yield.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2006
MA .4% 22% 8% 4*
Debt/ EPS
Down Net Value Line
Equity ROE Since 2004 Margin Rating
MA 0% 51% 0 37% A++
*MA has only paid a dividend for 7 years
Chart
Note: MA
stock made great progress off its March 2009 low, quickly surpassing the
downtrend off its June 2008 high (straight red line) and the November 2008
trading high (green line). Long term the
stock is in an uptrend; intermediate term, it is in an uptrend (purple lines). The wiggly red line is the 50 day moving
average. The Aggressive Growth Portfolio
owns a full position in MA. The upper
boundary of its Buy Value
Range is $540; the lower boundary
of its Sell Half
Range is $760.
9/13
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