| Stock (Symbol) | Stock Price | |
MasterCard (MA) |
$555 |
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| Data is as of | Expected to Report | Sector |
May 11, 2013 |
July 29 |
Financial |
| Sharek’s Take | ||
 MasterCard stock has been on a roll during the past year, rising from $434 to $555 (+28%). But along the way, profits have grown only 16%. The difference is MA’s P/E has gone up. That’s the trend this year: P/Es rising. But P/Es can’t rise forever. Eventually a stock will track its profit growth. A year ago (here’s my MA 2012 Q2 report) the stock had a P/E of 19 and growth had been stronger the past year. That one year chart looked better at the bottom (notice the green). I feel that MA has gone on a nice run, but the thrill is over for a bit as the company goes through six months of mediocre profit growth. MA will probably track the market’s returns for the rest of the year. |
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| One-Year Chart | ||
 Now MA’s P/E is 22. Now the company has said it will grow profits at least 20% a year through 2015, but this year will be slower. So the 22 P/E is reasonable. Notice quarterly profit growth has slowed and Estimates look even worse. |
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| Earnings Table | ||
 Last quarter, sales grew 8% and the company had good profit margins and bought back stock to grow profits 16%.MA only beat by a nickel for the second straight quarter. MA hasn’t been beating by much lately, I doubt the company can grow profits much better than 12% the next couple of quarters. Annual Profit Estimates have stayed consistent during the last year. Leading stocks raise estimates, MA has not. Quarterly estimates show the slower growth coming, but growth should pick up by year end. |
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| Fair Value | ||
 This 20% grower is worth 25 times earnings in the long-term. This is a solid stock. |
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| Ten-Year Chart | ||
 This ten-year chart shows the stock is a little extended here. Lots of stocks haven’t corrected in around a year, and that tells me there is a storm ahead. All stocks correct eventually. Also note profit growth has been slower the past two years (bottom/right). |
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| Power Ranking | Bottom Line | |
Growth Portfolio
10 of 17 |
MasterCard has been on a nice run, but I think the stock will cool down for the next six months and merely track the stock market’s returns. Still, this stock has momentum and is timely to own. This is a great holding for stock collectors. MA is ranked 10th of 17 stocks in the Growth Portfolio Power Rankings. MA isn’t in the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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