Mastercard beats the Street in third quarter on strong U.S. consumer spending
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Mastercard beats the Street in third quarter on strong U.S. consumer spending

Cashless transaction giant Mastercard reported third quarter earnings this week that beat the Street’s predictions. In outperforming for the three months ending in September, Mastercard joins peers Visa and PayPal (also held in Dominion’s Global Trends Ecommerce Fund) – both of which saw similar success. The driving force behind this barrage of positive performance? Strong U.S. consumer spending, which surged through the quarter.

Mastercard’s share price has risen by 23% so far this year

graph 0111 mastercard

Source: Yahoo Finance

For the third quarter of 2018, Mastercard reported adjusted earnings of $1.78 per share. This is an easy beat against Wall Street’s predictions of $1.68 per share, and converts to a 33% increase against the same period in 2017. Group sales rose by 15%, year on year, to $3.9 billion. Also reported against the year-ago quarter, gross dollar volumes were up by 13%, and purchase volumes increased 15%.

The company’s CEO, Ajay Banga, made the following comment over the results, highlights the success Mastercard is having when it comes to partnering with banks and merchants:

"We had another very strong quarter, delivering solid top- and bottom-line growth. Our business wins and new partnerships, strengthened by our differentiated services offerings, are helping drive our global momentum. We are continuing to invest for the long term with a focus on secure and convenient solutions that will help us grow our core business and address new payment flows."

As U.S. consumer spending grew by 0.4% in September, and August’s figure was revised to 0.5%, Mastercard is seeing successes similar to Visa and PayPal. With employment at its lowest level in the country since 1969, and August alone seeing U.S. pay-per-hour expand by 2.96% (the largest monthly expansion in 9 years), the U.S. is currently looking very rosy for payment providers.

Disclosure
Dominion holds Mastercard, as well as PayPal and Visa, in its Global Trends Ecommerce Fund.


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