Mastercard Incorporated ROIC dropped on 25.1 pp from 72.7% to 47.6% in 2020 and EBITDA dropped on 15.8%
01/28/2021 • About Mastercard Incorporated (
$MA) • By InTwits
Mastercard Incorporated reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Mastercard Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $463m in FY2020, $432m in FY2019, $635m in FY2018, $1,069m in FY2017, $723m in FY2016
- The company has highly profitable business model: ROIC is 47.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Mastercard Incorporated's Revenue decreased on 9.4%. Annual revenue decline showed slowdown in FY20Q4 - revenue decreased on 6.7%. During FY2016-FY2020 Revenue growth topped in FY2018 at 19.6% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.57 pp from 16.0% to 16.6% in FY2020.
SG&A as a % of Revenue increased on 3.3 pp from 39.7% to 42.9% in FY2020.
Net Income margin decreased on 6.2 pp from 48.1% to 41.9% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.2% in FY2020. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 2.3%.
Return on investment
The company operates at high and attractive ROIC (47.6%) and ROE (104.4%). ROIC dropped on 25.1 pp from 72.7% to 47.6% in FY2020. ROE dropped on 39.5 pp from 144% to 104% in FY2020. During FY2016-FY2020 ROIC topped in FY2019 at 72.7%. During the last 5 years ROE topped in FY2019 at 144%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 1.5x. Net Debt / EBITDA increased on 0.1x from 0.2x to 0.3x in FY2020. Debt surged on 36.4% while cash jumped on 44.7%. Net Debt/EBITDA followed a growing trend at 0.1x per annum in the last 5 years.
Mastercard Incorporated has no short term refinancing risk: cash is higher than short term debt (1,558.2%).
Valuation and dividends
The company's trades at EV/EBITDA 37.3x and P/E 49.9x.
Management team
The company's CEO is Michael Miebach. Michael Miebach has 2 months tenure with the company. The company's CFO is Sachin Mehra. Sachin Mehra has 1 year tenure at the company.
Financial and operational results
Mastercard Incorporated ($MA) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 10,776 | 12,497 | 14,950 | 16,883 | 15,301 | -9.4% |
| SG&A | 4,525 | 5,424 | 6,081 | 6,697 | 6,567 | -1.9% |
| EBITDA | 6,134 | 7,059 | 7,741 | 10,285 | 8,661 | -15.8% |
| EBIT | 5,761 | 6,622 | 7,282 | | | |
| Interest expence | 95 | 154 | 186 | | | |
| Tax | 1,587 | 2,607 | 1,345 | | | |
| Net Income | 4,059 | 3,915 | 5,859 | 8,118 | 6,411 | -21.0% |
| Stock Based Compensation | 101 | 176 | 196 | | | |
Balance Sheet
|
|---|
| Cash | 6,721 | 5,933 | 6,682 | 6,988 | 10,113 | 44.7% |
| Accounts Receivable | 1,416 | 1,969 | 2,276 | | | |
| Accounts Payable | 609 | 933 | 537 | | | |
| Short Term Debt | 0 | 0 | 500 | 106 | 649 | 512.3% |
| Long Term Debt | 5,180 | 5,424 | 5,834 | 9,183 | 12,023 | 30.9% |
Cash flow
|
|---|
| Capex | 215 | 300 | 330 | 422 | 339 | -19.7% |
| Dividends | 837 | 942 | 1,044 | | | |
| Acquisitions | | 1,175 | | | | |
Ratios
|
|---|
| Revenue growth | 11.5% | 16.0% | 19.6% | 12.9% | -9.4% | |
| EBITDA growth | 12.7% | 15.1% | 9.7% | 32.9% | -15.8% | |
|
|---|
| EBITDA Margin | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% | -4.3% |
| EBIT Margin | 53.5% | 53.0% | 48.7% | | |
| SG&A, % of revenue | 42.0% | 43.4% | 40.7% | 39.7% | 42.9% | 3.3% |
| SBC, % of revenue | 0.9% | 1.4% | 1.3% | | |
| Net Income Margin | 37.7% | 31.3% | 39.2% | 48.1% | 41.9% | -6.2% |
| CAPEX, % of revenue | 2.0% | 2.4% | 2.2% | 2.5% | 2.2% | -0.3% |
|
|---|
| ROIC | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% | -25.1% |
| ROE | 69.5% | 70.4% | 107.9% | 143.8% | 104.4% | -39.5% |
| Net Debt/EBITDA | -0.3x | -0.1x | -0.0x | 0.2x | 0.3x | 0.1x |
| Interest expence / Average debt | 1.8% | 2.9% | 3.2% | | | |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | | | |
| Employees | 11,900 | 13,400 | 14,800 | | | |
| Revenue/Employee, th. $ | 906 | 933 | 1,010 | | | |
Mastercard Incorporated ($MA) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4,009 | 3,335 | 3,837 | 4,120 | | 3.1% | -18.9% | -14.1% | -6.7% |
| EBITDA | 2,355 | 1,852 | 2,246 | 2,208 | | 0.1% | -27.1% | -20.3% | -14.3% |
| Net Income | 1,693 | 1,420 | 1,513 | 1,785 | | -9.1% | -30.7% | -28.2% | -15.0% |
Balance Sheet
|
|---|
| Cash | 10,207 | 11,137 | 10,225 | 10,113 | | 74.3% | 95.7% | 100.5% | 44.7% |
| Short Term Debt | 0 | 0 | 0 | 649 | | -100.0% | -100.0% | -100.0% | 512.3% |
| Long Term Debt | 12,466 | 12,498 | 12,574 | 12,023 | | 103.5% | 53.5% | 54.8% | 30.9% |
Ratios
|
|---|
| EBITDA Margin | 58.7% | 55.5% | 58.5% | 53.6% | | -1.7% | -6.2% | -4.5% | -4.7% |
| Net Income Margin | 42.2% | 42.6% | 39.4% | 43.3% | | -5.6% | -7.2% | -7.8% | -4.3% |
Peers in Data Processing & Outsourced Services
Below we provide Mastercard Incorporated benchmarking against other companies in Data Processing & Outsourced Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.4% | 8.9% | -2.7% |
|---|
| Mastercard Incorporated ($MA) | - | 16.0% | 19.6% | 12.9% | -9.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (32 companies) | 39.3% | 39.3% | 41.0% | 41.0% | 36.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| Evertec, Inc. ($EVTC) | 42.8% | 36.9% | 41.5% | 45.2% | 43.1% |
| |
|---|
| Median (38 companies) | 21.2% | 20.6% | 19.2% | 21.7% | 18.2% |
|---|
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.3% | 3.1% |
|---|
| Mastercard Incorporated ($MA) | 2.0% | 2.4% | 2.2% | 2.5% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| TTEC Holdings, Inc. ($TTEC) | 10.1% | 16.1% | 13.5% | 16.8% | 21.1% |
| |
|---|
| Median (39 companies) | 11.1% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Mastercard Incorporated ($MA) | -0.3x | -0.1x | -0.0x | 0.2x | 0.3x |
