MASTERCARD INC - A (NYSE:MA) – A Quality Stock with Strong Fundamentals

MASTERCARD INC - A (NYSE:MA) stands out as a compelling candidate for quality investors, meeting key criteria for long-term growth, profitability, and financial health. The company’s strong fundamentals align with the principles of quality investing, making it worth a closer look.

Why MASTERCARD Fits the Quality Investing Profile

• High Return on Invested Capital (ROIC): MASTERCARD’s ROIC (excluding cash and goodwill) is an impressive 180.6%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Strong Profitability: The company’s EBIT growth over the past five years has averaged 10.8%, exceeding revenue growth, which suggests improving operational efficiency.
• Healthy Debt Management: With a Debt-to-Free Cash Flow ratio of 1.31, MASTERCARD could repay its debt in just over a year using current cash flows—a sign of financial strength.
• Profit Quality: The five-year average Profit Quality (Free Cash Flow to Net Income) is 101.1%, meaning earnings are consistently converted into cash, a hallmark of a well-run business.

Fundamental Analysis Summary

MASTERCARD earns a solid 7 out of 10 in our fundamental analysis, with standout ratings in profitability (8/10) and financial health (8/10). Key strengths include:

• Exceptional Margins: Operating margin of 58.7% and profit margin of 45.2% place it among the top performers in its industry.
• Consistent Growth: Revenue and earnings have grown steadily, with analysts projecting continued expansion.
• Valuation Considerations: While the stock trades at a premium (P/E of 38.4), its high growth and profitability may justify the price for long-term investors.

For more quality stock ideas, explore our Caviar Cruise screener.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.