Exploring The Competitive Space: Mastercard Versus Industry Peers In Financial Services
In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Mastercard (NYSE:MA) against its key competitors in the Financial Services industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Mastercard Background
Mastercard is the second-largest payment processor in the world, having processed close to over $9 trillion in volume during 2023. Mastercard operates in over 200 countries and processes transactions in over 150 currencies.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Mastercard Inc | 34.47 | 55.66 | 15.87 | 42.49% | $3.92 | $4.83 | 10.44% |
| Visa Inc | 29.42 | 13.62 | 15.85 | 11.86% | $5.84 | $6.98 | 9.89% |
| Fiserv Inc | 27.93 | 3.02 | 4.65 | 2.51% | $1.96 | $2.88 | 7.39% |
| PayPal Holdings Inc | 14.84 | 2.98 | 2.11 | 4.25% | $1.56 | $3.46 | 9.36% |
| Fidelity National Information Services Inc | 102.67 | 2.28 | 4.39 | 3.9% | $0.8 | $0.92 | 2.92% |
| Block Inc | 107.23 | 2.09 | 1.74 | 2.51% | $0.51 | $2.09 | 19.38% |
| Global Payments Inc | 18.85 | 1.09 | 2.52 | 1.39% | $0.95 | $1.5 | 5.57% |
| Corpay Inc | 20.33 | 5.90 | 5.34 | 7.03% | $0.48 | $0.73 | 3.76% |
| Jack Henry & Associates Inc | 31 | 6.59 | 5.36 | 4.97% | $0.17 | $0.21 | 5.9% |
| WEX Inc | 28.77 | 4.17 | 2.94 | 3.66% | $0.23 | $0.39 | 6.65% |
| Euronet Worldwide Inc | 17.69 | 3.69 | 1.35 | 2.1% | $0.09 | $0.32 | 8.87% |
| Shift4 Payments Inc | 44.95 | 6.37 | 1.53 | 3.1% | $0.1 | $0.19 | 29.32% |
| The Western Union Co | 7.33 | 10.54 | 1.03 | 32.55% | $0.24 | $0.41 | 1.18% |
| PagSeguro Digital Ltd | 12.91 | 1.64 | 2.47 | 3.57% | $1.77 | $0.2 | 10.15% |
| StoneCo Ltd | 13.85 | 1.49 | 1.95 | 2.52% | $0.9 | $2.14 | 15.45% |
| Paymentus Holdings Inc | 83 | 5.39 | 3.69 | 1.66% | $0.02 | $0.05 | 24.64% |
| DLocal Ltd | 18.23 | 4.86 | 3.48 | 3.8% | $0.05 | $0.06 | 34.34% |
| Evertec Inc | 31.52 | 3.96 | 2.78 | 2.9% | $0.07 | $0.1 | 28.47% |
| Payoneer Global Inc | 17.63 | 2.99 | 2.38 | 4.37% | $0.05 | $0.19 | 18.84% |
| Average | 34.9 | 4.59 | 3.64 | 5.48% | $0.88 | $1.27 | 13.45% |
Upon a comprehensive analysis of Mastercard, the following trends can be discerned:
-
The stock's Price to Earnings ratio of 34.47 is lower than the industry average by 0.99x, suggesting potential value in the eyes of market participants.
-
With a Price to Book ratio of 55.66, which is 12.13x the industry average, Mastercard might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
-
The Price to Sales ratio of 15.87, which is 4.36x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
-
The company has a higher Return on Equity (ROE) of 42.49%, which is 37.01% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
-
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.92 Billion, which is 4.45x above the industry average, indicating stronger profitability and robust cash flow generation.
-
The gross profit of $4.83 Billion is 3.8x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
-
The company's revenue growth of 10.44% is significantly lower compared to the industry average of 13.45%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By analyzing Mastercard in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
-
When comparing the debt-to-equity ratio, Mastercard is in a stronger financial position compared to its top 4 peers.
-
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 2.16.
Key Takeaways
For Mastercard, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, EBITDA, and gross profit, Mastercard demonstrates high profitability and operational efficiency. However, the low revenue growth rate may raise concerns about future performance compared to industry peers in the Financial Services sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.