Mastercard (MA) Beats Q4 Views as Latin America Ramps Up Spending; Analysts Review

Mastercard Incorporated (NYSE: MA) is trading higher today following their 2010 fourth quarter earnings results which saw a jump in cross-border volumes and increase in gross dollar volume leading them to stronger results. Shares are up 3% this afternoon.

MA reported net income of $415 million, or $3.16 per share, which was a 41.2% jump from $294 million reported in Q409.

Revenues for the company increased 10.7% from $1.299 billion to $1.438 billion.

Overall, the consensus was looking for EPS of $3.04 on revs of $1.42 billion.

Purchase volumes for the company increased 10.8% to $567 billion, with the U.S. increasing 3.3% to $214 billion. and Latin America making the biggest jump, 25% to $38 billion.

Commenting on the results:

• Goldman Sachs said that, on a reported basis, key metrics that they take away from the quarter are: (1) Total purchase volume of $567 bn (+10.8% constant currency) vs. our $556 bn (+8.7% yoy). (2) US Credit purchase volume of $126 bn (+3.2% yoy) was slightly above our $123 bn (flat yoy). (3) US Debit purchase volume came in at $88 bn (+3.6% yoy) vs. our $86 bn (+1.0% yoy). (4) International Credit purchase volume of $353 bn (+15.8% yoy) vs. our $297 bn (+13% yoy). (5) International Debit purchase volume of $53 bn (+31.7% yoy) vs. our $50 bn (+24% yoy). (6) Total processed transactions were 6.233 bn (+6.3% yoy) vs. our 5.893 bn (+0.5% yoy). Finally, cross-border volumes finished up 18.7% on a constant currency basis, ahead of our 15% estimate."
  
  MA business is continuing to perform well as volumes, transactions, and cash flow generation remain robust. Goldman says the shares are still attractive at 14.6x CY11 EPS estimates. Goldman has a Buy on the shares, and $285 price target.
  
  
• Janney said that results benefited from an unusually low tax-rate, adding about $0.25 per share. They note that "revenue growth appears sustainable given the improvement in corresponding GDV, which was up 11% for the quarter (globally), versus our 4.5% expectation."
  
  Additionally, Janey says that a settlement in their pending merchant class action suit, any settlement, should be viewed as a positive for the shares. They currently have a Buy rating and $275 fair value on the shares.

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