Q1 Preview: MasterCard (MA) Looks to Cash-In as Transactions, Dollar Volumes Improve

MasterCard (NYSE: MA) is just about flat today ahead of the Company's first-quarter earnings report, expected out before market opens Tuesday.

MasterCard is expected to report EPS of $4.10 on revs of $1.46 billion. Last quarter, the Purchase, NY-based financial services giant had EPS of $3.16 per share on revs of $1.44 billion, both beating the consensus. Looking back at Q110, MasterCard produced EPS of $3.46 per share with revs of $1.31 billion, versus consensus EPS of $3.16 per share and revs of $1.27 billion.

Shares gained 14 percent through the quarter, to $251.58 at the end of March. The stock is up 9.6 percent since then, and finished 2010 about 12.3 percent lower.

MasterCard shares are going for a forward P/E of 14.1x FY12 EPS estimates, compared with 14.1x at Visa, Inc. (NYSE: V) and 9.9x at Discover Financial Services (NYSE: DFS).

Data from Bloomberg has 29 analysts with a Buy on MasterCard, 7 with a hold, and one suggesting to Sell. The analyst price target average is $292, with a high of $330 and low of $220. Shares have traded in a range of $280.00 - $191.00 over the last 52-weeks.

Analyst Summary

• Goldman Sachs sees EPS of $4.20 with revs of $1.478 billion. Key points into the quarter include: "In a 3/10/2011investor presentation, MA disclosed transaction updates through February 14 that were either in line with or above reported January and 4Q10 trends. Overall, global processed transactions improved in February (+11%) vs. January (+9%) and 4Q10 (+6.3%). U.S. processed transactions grew 4% in February, which was ahead of the 1% growth in January and 3% increase in the 4Q10. ROW transactions posted a 20% yoy increase, which compares to a 22% increase in January and 17% rise in 4Q10."
  
  
• Wedbush is looking for EPS of $4.28 and revs of $1.500 billion. Commenting on estimates, Wedbush says, "We believe that MasterCard will continue to grow on the strength of its international business. However, we expect the impact from the potential implementation of the Durbin amendment by the Fed in its current form to significantly impair growth in the U.S. for the foreseeable future."
  
  
• Duncan-Williams is expecting EPS of $4.25 with revenues of $1.444 billion. Details of Duncan-Williams' estimates include: Gross Dollar Volume of $700 billion, Processed Transactions of 5.695 billion, Rebates & Incentives will be 24 percent of Gross revs, and operating income of $813.4 million.
  
  Commenting: "Given card transaction trends during the quarter as well as the weak dollar, we expect to see some upside relative to the consensus expectations. Importantly, we believe that the growth in credit card volumes continued to accelerate during the quarter. However, as always, advertising spend could be a significant swing factor in the quarter."
  
  
• Deutsche Bank sees EPS of $4.14 and revs of $1.4 billion. Deutsche sees Gross Dollar Volume increasing 12 percent in the quarter. Commenting, Deutsche says, "[First-quarter] revs growth should get a boost from improving macro and recent business wins (SunTrust), waning impact from debit deconversions as well as the DataCash acquisition. On margins, we are mindful of MA’s more aggressive investment agenda this year and higher expenses associated with recent acquisitions. We also expect MA was aggressively buying back its shares."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

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