MASTERCARD SHORT
Short from $192.71
Market Cap - 201.5B
Beta - 0.98
Trailing P/E - 47.59
Forward P/E - 27.34
P/B - 35.46
- Founded in 1996 and based in NY, Mastercard has outperformed it's industry for quite some time now. The company was well positioned for growth given its large market share, ongoing expansion and significant secular shifts towards electronic payments.
- Despite a strong balance sheet, growing ROE, consistent revenue growth and ongoing acquisition - we believe Mastercard is overbought and has some risks to its share price.
- Mastercard has high expenses and continues to face problems in maintaining their operation costs. Over the past five years operating costs have been increasing and in fiscal 2017 their operating expenses increased 16% due to higher advertising and marketing costs and also higher general and administrative expenses. We believe that operating expenses will continue to increase over coming quarters because of investments in long term plans e.g. security solutions, geographic expansion which also means more employee and technology investments and also digital investments. Mastercard expects YoY operating expenses for 2018 to grow at a "low double-digit rate".
- The share price is massively overpriced, their forward P/E is 27.34x which will cause investors to hold off a little and not to pay such a premium. It's forward P/E ratio has been higher than the industry's for quite some time now. Price to Book is also showing signs of the equity being overstretched at 35.46.
- In order to gain new customers and businesses, Mastercard have incurred quite high costs under their rebates and incentives. In 2015 this dragged revenues down 5%, in 2016 2% and in 2017 MA saw a 22% increase in rebates and incentives. If the incentives continue to accelerate we believe that this will affect the company's financials in the not so distant future.
NeroTree Capital rates Mastercard Incorporated as a SELL with a price target of $150.
Market Cap - 201.5B
Beta - 0.98
Trailing P/E - 47.59
Forward P/E - 27.34
P/B - 35.46
- Founded in 1996 and based in NY, Mastercard has outperformed it's industry for quite some time now. The company was well positioned for growth given its large market share, ongoing expansion and significant secular shifts towards electronic payments.
- Despite a strong balance sheet, growing ROE, consistent revenue growth and ongoing acquisition - we believe Mastercard is overbought and has some risks to its share price.
- Mastercard has high expenses and continues to face problems in maintaining their operation costs. Over the past five years operating costs have been increasing and in fiscal 2017 their operating expenses increased 16% due to higher advertising and marketing costs and also higher general and administrative expenses. We believe that operating expenses will continue to increase over coming quarters because of investments in long term plans e.g. security solutions, geographic expansion which also means more employee and technology investments and also digital investments. Mastercard expects YoY operating expenses for 2018 to grow at a "low double-digit rate".
- The share price is massively overpriced, their forward P/E is 27.34x which will cause investors to hold off a little and not to pay such a premium. It's forward P/E ratio has been higher than the industry's for quite some time now. Price to Book is also showing signs of the equity being overstretched at 35.46.
- In order to gain new customers and businesses, Mastercard have incurred quite high costs under their rebates and incentives. In 2015 this dragged revenues down 5%, in 2016 2% and in 2017 MA saw a 22% increase in rebates and incentives. If the incentives continue to accelerate we believe that this will affect the company's financials in the not so distant future.
NeroTree Capital rates Mastercard Incorporated as a SELL with a price target of $150.
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