NEW YORK (TheStreet) -- MasterCard (MA) was falling 5.33% to $75.51 on Friday after the world's second-largest credit card company reported fourth-quarter earningsthat fell short of analysts' expectations. The stock plunged to a low of $71.75 shortly before the market opened but then recovered shortly thereafter.
The company reported net income of $623 million, or 52 cents a share, a 3% increase from $605 million, or 49 cents a share, in the same period a year earlier. Adjusted EPS was 57 cents, which came in below analysts' estimates of 60 cents. Net revenue increased 12% to $2.13 billion; analysts polled by Thomson Reuters expected $2.14 billion.
MasterCard noted that total operating expenses rose 21.1% to $1.21 billion, in part because the company put aside $95 million for litigation settlements. Visa (V) and MasterCard settled a $5.7 billion class-action suit in December in which merchants accused the two credit card companies of fixing the fees charged to merchants when customers used their credit or debit cards. The merchants also accused the two credit card giants of preventing them from offering customers cheaper payment alternatives.
MasterCard's global purchase volume increased 11% to $805 billion from the same period a year earlier, and annual growth in U.S. purchase volume increased 7.4% to $275 billion.
TheStreet Ratings team rates MASTERCARD INC as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about its 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, increase 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."