Mastercard’s stock has increased by around 7% year-to-date, whereas the S&P500 index has risen by 8% during the same period.
Despite this, the stock is currently trading at $373 per share, which is 13% below its estimated fair value of $427, according to Trefis. As a prominent global provider of payment solutions, the company exceeded expectations in Q4 2022 by reporting net revenues of $5.82 billion, representing a 12% year-over-year increase. The growth was fueled by a 31% surge in cross-border volume, followed by an 8% increase in gross dollar volume and an 8% rise in switched transactions. However, operating expenses rose by 10% during the quarter. Overall, the company reported a 6% year-over-year improvement in net income, reaching $2.5 billion.
The revenue growth was driven by a 45% hike in cross-border volumes, 12% rise in gross dollar volume and several switched transactions. It eventually led to a total revenue growth of 18% year over year to 22.2 $ dollars in the financial year 2022.
The positive impact of revenue growth was partly affected by the decrease in total other income from $225 million to -$532 million.
Looking ahead, it is expected that Mastercard’s revenue will continue to grow in the first quarter of 2023. According to estimates, Mastercard is projected to generate revenues of $25.2 billion in the fiscal year 2023. The company's adjusted net income margin is also expected to improve, resulting in a net income of $11.5 billion for the year. When combined with an annual EPS of $12.04 and a P/E multiple slightly above 35x, this is likely to result in a valuation of $427 for the company.
