MasterCard Profits Jump 25% (Update 1)

Updated with comments from KBW analyst Sanjay Sakhrani.
  • MasterCard reports first-quarter earnings per share of $5.36.
  • Analysts were expecting EPS of $5.30.
  • Net revenue rises 17% year-over-year.

NEW YORK ( TheStreet) - MasterCard ( MA) on Wednesday reported first-quarter earnings of $682 million, or $5.36 a share, ahead of the average estimate of analysts polled by Thomson Reuters for a profit of $5.30 a share.

The latest numbers were up from an adjusted profit of $514 million, or $4.03 a share, in the fourth quarter, and earnings of $562 million, or $4.29 a share, in the first quarter of 2011.

Revenue for the latest three months totaled $1.8 billion, compared to $1.7 billion the previous quarter, and $1.5 billion, a year earlier.

The company said that purchasing volume rose 17% year-over-year, on "a local currency basis," to $629 billion during the first quarter.

CEO Ajay Banga said "we had a good start to the year with solid first quarter results driven by an increase in processed transactions, the highest quarterly growth rate since our IPO, as well as positive volume growth in all regions as consumers continue to adopt electronic payments."

KBW analyst Sanjay Sakhrani rates MasterCard "Outperform," with a $484 price target, and said that although the company's first-quarter EPS came in slightly below his estimate of $5.40, it "reported a solid quarter despite coming in a little lower than our expectations. Operating trends were constructive with solid goss dollar volume growth worldwide, with particular resilience in Europe," where volume growth accelerated "sequentially on an constant currency basis."

Sakhrani estimates that MasterCard will earn $22.02 a share this year, followed by 2013 EPS of $25.93.

MasterCard's shares closed at $455.90 Tuesday, returning 22% year-to-date, following a flat total return during 2011.

The shares trade for 18 times the consensus 2013 EPS estimate of $25.91. The consensus 2012 EPS estimate is $22.01.

Interested in more on MasterCard? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.