| Stock (Symbol) | Stock Price | |
MasterCard (MA) |
$795 |
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| Data is as of | Expected to Report | Sector |
December 11, 2013 |
Jan 27 – Jan 31 |
Financial |
| Sharek’s Take | ||
 Everything is going right for MasterCard (MA). The stock is having a banner year: management reiterated profits should compound 20% a year through 2015, the company just announced a 10-for-1 split (which means nothing) and management just upped the dividend from 60 cents to $1.10. The buyback is for an additional $3.5 billion in stock on top of the current $2 billion buyback, which is 3/4 complete. The negative news is MA’s valuation is among the highest it has ever been. In 2011 Q4 the stock was selling for 17 times next year’s earnings. Last year the stock was selling for 18 times next year’s earnings. Now, at $795, MA’s selling for 26 times next year’s profits. I see the P/E going to 28 next year and that leaves little upside for these shares, even though the news is great. |
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| One-Year Chart | ||
 Today with the buyback/split news the stock touched $800 and its now $794. That’s a P/E of 26. Profit estimates have clicked up by a few cents today, but that’s not enough for me to drastically change my view. |
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| Earnings Table | ||
 Last quarter sales growth was 16%, but MA also had more costs and profit growth was only 18%. Usually profits grow much faster than sales.MasterCard beat the street by a robust 36 cents, the second straight quarter of solid beats.Annual Profit Estimates increased, but not by a whole lot. I’m surprised this stock is so strong. I think it’s because 2013 is a banner year for stocks.Quarterly estimates look like they usually do, around 20% growth is coming. |
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| Fair Value | ||
 This profit history table is perfect. The only negative is the stock’s got a 26 P/E right now. |
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| Ten-Year Chart | ||
 I think this stock needs a rest. Notice in the ten-year chart the last year has been better than normal. There’s also no support levels until the low-$400s. MasterCard needs a break, it needs to build a new base. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
16 of 25 |
MasterCard continues to shine, but the stock is a little ahead of itself at this point. I think the stock will base in 2014, it’s selling close to its Fair Value. Still, this is an excellent long-term investment, as the company can easily grow profits 20% a year. I just cut MA in my Growth Portfolio Power Rankings from 14 to 16 out of 25 stocks. You can take profits. MA isn’t in the Aggressive Growth Portfolio. Not enough upside. |
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Aggressive Growth Portfolio
N/A |
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