Mastercard Incorporated MA recently announced guidance for the 2025-2027 timeframe. For this period, it expects a compound annual growth rate (CAGR) in net revenues at the high end of low-double-digits percentage growth. This indicates a decline from 2022-2024 period’s estimated CAGR of high-teens percentage rate.

Moreover, it expects a CAGR in earnings per share (EPS) in the mid-teens for the 2025-2027 period, compared with the low 20s of the 2022-2024 timeframe. However, it estimates the annual operating margin to improve from a minimum of 50% between 2022 and 2024 to minimum 55% for the 2025 to 2027 period.

Nevertheless, the company is taking steps to expand its business.

MA’s Growth Drivers

The company expects annual carded market volume growth to be around 9% for the 2025-2027 period, excluding China. It plans to boost its Services and Solutions business going forward, further diversifying its revenue streams. It foresees high-teens net revenue CAGR from value-added services and solutions for 2025-2027. MA is expected to strengthen its presence in anti-fraud solutions, which is witnessing rising demand.

Its target addressable market in services, which it can serve with existing capabilities, is estimated at $490 billion. Also, the company boasts a geographically diverse business with around 34% of total GDV coming from North America, followed by 33% in Europe, 24% in the APMEA region and 9% in Latin America.

This presents an opportunity for the company to expand its presence in developing economies and grow its market share. Moreover, its presence in China’s market with local joint ventures can be a major growth driver, differentiating MA from its peers.

MA's Price Performance

Shares of Mastercard have gained 31.2% in the past year compared with the industry’s 34.5% growth.

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Zacks Rank & Key Picks

Mastercard currently carries a Zacks Rank #3 (Hold).

Investors can also look at some better-ranked stocks from the broader Business Services space, like Affirm Holdings, Inc. AFRM, Cantaloupe, Inc. CTLP and Repay Holdings Corporation RPAY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Affirm’s current-year earnings indicates a 64.1% year-over-year improvement. AFRM beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 17.8%. The consensus estimate for current-year revenues is pegged at $3.1 billion, a 33.5% year-over-year growth.

The Zacks Consensus Estimate for Cantaloupe’s current-year earnings indicates a 113.3% year-over-year surge. CTLP beat earnings estimates in two of the trailing four quarters, met once and missed on the other occasion, with the average surprise being 20%. The consensus estimate for current-year revenues implies 15.9% year-over-year growth.

The consensus estimate for Repay Holdings’ current-year earnings indicates a 4.6% year-over-year increase. It beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 9.3%. The consensus estimate for RPAY’s current-year revenues is pegged at $316.7 million, implying 6.8% year-over-year growth.

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Mastercard Incorporated (MA) : Free Stock Analysis Report

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