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MasterCard (MA) Expands European Footprint Through Acquisition

Editor's Note: MasterCard is a Trifecta Stocks holding. If you own, or are thinking of owning MA, you HAVE to sign up for the FREE webinar hosted by TheStreet's fundamental expert Bryan Ashenberg and technical expert Bob Lang. Sign up now!

NEW YORK (TheStreet) -- MasterCard (MA) has entered into an agreement to purchase Turkey's leading independent payment and processing provider, Provus, for an undisclosed amount. The acquisition, expected to close by year's end, is in line with MasterCard's strategy of increasing its presence in high-growth markets.

"Turkey continues to be a very exciting and growing market," said MasterCard Europe President Javier Perez in a statement. "This acquisition provides an important platform that will enable us to not only serve customers locally but also to continue to deliver innovative payment solutions across the region."

Europe accounts for around 25% of MasterCard's revenue, while the U.S. sees the majority at 40% of revenue. 

Trifecta Stocks' Bryan Ashenberg and Bob Lang wrote in recent analysis that while a weakening technical outlook had them lowering their rating on the stock, the company's fundamental drivers remain intact (figures which include a 15% year-on-year revenue increase for the second quarter ended June 30).

MasterCard will report third-quarter earnings before the bell on October 31.

MasterCard shares are 2.7% higher to $675 as of 2:05 p.m. New York time. Mastercard shares have risen sharply this year, gaining 37.6% year-to-date, compared to the S&P 500 which has gained 18%.

TheStreet Ratings team rates MasterCard Inc as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MasterCard Inc (MA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 15.3%. Since the same quarter one year prior, revenues rose by 15.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MasterCard Inc has improved earnings per share by 25.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MasterCard Inc increased its bottom line by earning $21.94 a share vs. $14.83 a share in the prior year. This year, the market expects an improvement in earnings ($26.14 vs. $21.94).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 21.1% when compared to the same quarter one year prior, going from $700 million to $848 million.
  • The gross profit margin for MasterCard Inc is rather high; currently it is at 61.5%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 40.45% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $742 million or 15.75% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.55%.

RememberMasterCard is a Trifecta Stocks holding.  If you own, or are thinking of owning MA, you HAVE to sign up for the FREE webinar hosted by TheStreet's fundamental expert Bryan Ashenberg and technical expert Bob Lang.  Sign up now!

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