As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Mastercard Incorporated (NYSE:MA), it is a financially-sound company with a great history and a buoyant future outlook. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Mastercard here.
Solid track record with reasonable growth potential
MA is expected to churn out cash in the short term, with its operating cash flow predicted to expand by 55%. This is expected to flow down into an impressive return on equity of 100% over the next couple of years. Over the past year, MA has grown its earnings by 50%, with its most recent figure exceeding its annual average over the past five years. Not only did MA outperformed its past performance, its growth also exceeded the IT industry expansion, which generated a 13% earnings growth. This paints a buoyant picture for the company.
MA is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. MA seems to have put its debt to good use, generating operating cash levels of 0.98x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For Mastercard, there are three essential aspects you should further examine:
- Valuation: What is MA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MA is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does MA return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from MA as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MA? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.