Increased Use of Plastic Equals Money for MasterCard

The use of credit and debit cards is increasing and MasterCard Inc. (NYSE:MA) is reaping the benefits. Their fourth-quarter profit jumped 24 percent, the most in three months. Estimates by analyst were $3.91, but profit increased to $4.03 a share, compared to last year’s $3.17 a share.

MasterCard’s CEO Ajay Banga said, “We are seeing sustained momentum driven by new deals and the ongoing shift away from paper-based payments.”

MasterCard’s is involved with an antitrust suit over how much banks charge merchants to process transactions. In November, MasterCard along with Visa Inc. (NYSE:V) set any prospective settlement at around $4 billion. They both decided that Visa would be accountable for two-thirds and MasterCard for about one-eighth of any settlement. “With these kinds of negotiations, you do not know when the thing gets settled,” Chief Financial Officer Martina Hund- Mejean said, “We’re already in the sixth year of this thing. I really would be lying if I gave you any kind of timing on this.”

Worldwide use of MasterCard- and Maestro-branded cards increased 16 percent. Consumers shopping outside their own country rose 18 percent. Processed transactions were up 23 percent.

“It was a combination of a lot of things that sort of made them like the perfect stock,” said Donald Fandetti, a Citigroup Inc. analyst. “You had a company that was beating numbers, a very strong capital return story with share purchases and you had a world where investors weren’t fully comfortable with some of the alternatives.”

Here’s how MasterCard is trading now:

Mastercard Incorporated (NYSE:MA): MA shares recently traded at $387.50, up $5.93, or 1.55%. They have traded in a 52-week range of $240.36 to $384.99. Volume today was 853,565 shares versus a 3-month average volume of 1,060,050 shares. The company’s trailing P/E is 21.74, while trailing earnings are $17.80 per share.

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