MasterCard (MA) Q3 Profits See a Charge, But Shares Down (Update)

November 3, 2009 10:52 AM EST

MasterCard Incorporated (NYSE: MA) reported a third-quarter earnings per share of $3.48, ex-items, well ahead of the analyst estimate of $2.94, and up from a loss of $1.48 in the same quarter last year. Profit for the Company dramatically improved over the year-ago quarter to $456 million, from a loss of $194 million.

The world's second-largest credit card network reported that revenue for the quarter was $1.4 billion, which compares to the market consensus of $1.35 billion, and increasing 2 percent over the year-ago quarter.

The increase in profit and revenue are attributed to the company's raised fees to banks, expense cutbacks and a 7.6 percent jump in the number of transactions by consumers.

"We are very pleased with our third-quarter financial results, specifically since we began to see signs of stabilization in parts of our business," said Robert W. Selander, MasterCard CEO.

Excluding special items, total operating expenses decreased for the company by 13.3 percent.

Following the results, analysts at Lazard Capital Market have maintained a Buy rating on Mastercard, citing the company benefiting from clear operating leverage, as it significantly reduced operating expenses, while reporting much better than expected earnings.

"The bears might focus on the fact that the upside came from cost cutting, but we believe that MA will benefit from easing headwinds in 2010 and we expect a return to double-digit revenue growth in the next few quarters," Lazard analysts stated. "The stock should trade up on this news."

Despite the analyst forecast of upward movement on the shares of Mastercard, the company's shares are currently trading down 3 percent at $216.41.

Related Categories

Earnings

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Related Entities

• Citi
• Lazard

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