MA Stock Study (6-28-26)

Posted by Mark on August 17, 2026 at 07:25 | Last modified: June 28, 2026 10:46

I recently did a stock study on Mastercard Inc. (MA, $499.02).

M* writes:

     > Mastercard is the second-largest payment processor in the
     > world, having processed close to $11 trillion in volume
     > during 2025. Mastercard operates in over 200 countries
     > and processes transactions in over 150 currencies.

Over the past 10 years, this large-size company grows sales and earnings at annualized rates of 12.4% and 18.3%. Lines are up, mostly straight, and parallel except for sales+EPS decline in ’20. Value Line (VL) gives an Earnings Predictability score of 90. Shares outstanding decrease 17.7% (2.1%/year).

Over the past 10 years, PTPM leads peer and industry averages while ranging from 48.2% in ’18 to 57.6% in ’19 with a last-5-year mean of 54.5%. ROE leads peer and industry averages while increasing from 64.1% to 186% (’25) with a last-5-year mean of 162.0% (shareholder equity consistently positive with 3.5% CAGR). Debt-to-capital is greater than peer averages but less than the industry while increasing from 47.8% to 71.1% (’25) with a last-5-year mean of 69.8%.

Quick ratio is 0.56 and interest coverage 27.7 per M* who assigns “Wide” Economic Moat, gives an “Standard” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A+ grade for Financial Strength.

Four references lead Google AI to state:

     > Mastercard’s debt level is generally not concerning, despite
     > appearing high on paper. While the company carries around
     > $18.96 billion in total debt—resulting in a high debt-to-equity
     > ratio—its robust cash generation, massive scale, and exceptional
     > interest coverage make the obligation highly manageable.

With regard to sales growth:

• YF gives YOY ACE 13.0% and 12.5% for ’26 and ’27 (based on 36 analysts).
• Zacks gives YOY ACE 12.8% and 12.5% for ’26 and ’27 (12 analysts).
• VL projects 9.7% per year from ’25-’30.
• CFRA projects 13.5% YOY and 12.8% per year for ’26 and ’25-’27, respectively.
• M* gives a 2-year ACE of 19.1% while projecting 13.4% per year from ’25-’30 in Equity Report.

My 9.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 17.6% and 17.1% per year for ’25-’27 and ’25-’28, respectively (based on 40 analysts).
• Nasdaq.com gives ACE 15.0% and 14.1% per year for ’26-’28 and ’26-’29 [17 / 6 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 16.2%.
• Finviz gives 5-year annualized ACE of 15.8% (12).
• Argus projects 5-year CAGR of 20.0%.
• LSEG has LTG at 15.5%.
• YF gives YOY ACE 15.5% and 15.8% for ’26 and ’27, respectively (37).
• Zacks gives YOY ACE 15.2% and 15.5% for ’26 and ’27 along with 5-year annualized growth of 16.4% (16).
• VL projects 11.2% per year from ’25-’30.
• CFRA projects 18.2% YOY and 16.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 16.0%.
• M* gives long-term ACE of 16.6% and projects 16.1% in Equity Report.

My 11.0% forecast is below the long-term-estimate range (mean of eight: 15.9%). Initial value is ’25 EPS of $16.52/share rather than 2026 Q3 EPS of $17.28 (TTM).

My Forecast High P/E is 35.0. Over the past decade, high P/E ranges from 29.5 in ’16 to 45.8 in ’21 (excluding 57.7 in ’20) with last-5-year mean of 39.3 and a last-5-year-mean average P/E of 34.6. I am near bottom of the range (only ’16 is less).

My Forecast Low P/E is 22.0. Over the past decade, low P/E increases from 21.3 to 28.2 (’25) with a last-5-year mean of 29.9. I am forecasting near bottom of the range (only ’16 is less).

My Low Stock Price Forecast (LSPF) of $363.40 is default based on initial value from above: 27.2% less than previous close and 21.8% less than the 52-week low.

Over the past 10 years, payout ratio (PR) ranges from 16.6% in ’19 to 25.1% in ’20 with a last-5-year mean of 19.2%. My 16.0% forecast is at bottom of the range.

These inputs land MA in the BUY zone with a U/D ratio of 3.5. Total Annualized Return (TAR) is 14.8%.

PAR (using Forecast Average—not High—P/E) of 10.3% is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 124 studies done in the past 90 days (my study and 42 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 13.0%, 14.1%, 35.0, 28.2, and 19.2%, respectively. I am lower (or equal) across the board. VL projects a future average P/E of 30.0 that is less than MS (31.6) and greater than mine (28.5).

MS high / low EPS are $32.97 / $16.42 versus my $27.84 / $16.52 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $28.90 ($34.19) is in the middle (greater than both).

MS LSPF of $416.50 implies a Forecast Low P/E of 25.4: less than the above-stated 28.2. MS LSPF is 10.1% less than the default $16.42/share * 28.2 = $463.04 resulting in more conservative zoning. MS LSPF is 14.6% greater than mine, though.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Supporting the MOS is MS TAR exceeding mine by 4.0% per year and my lower LSPF.

With regard to valuation, PEG is 1.6 and 2.4 per Zacks and my projected P/E: overvalued (M* has 1.3). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.84. “Quick and dirty” cash flow (including capex, which is debatable) has stock undervalued by 45%. M* (CFRA) reports stock undervalued (overvalued) by 9% (7%).

Per U/D, MA is a BUY right now under $516/share. [974.4 / ((14.07 / 100 ) +1 ) ^ 5] ~ $504 meets the BetterInvesting® TAR criterion given a forecast high price ~$974.

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