Mastercard (MA)

Global payments technology company Mastercard (NYSE:MA) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 16.7% year on year to $8.60 billion. Its non-GAAP profit of $4.38 per share was 1.5% above analysts’ consensus estimates.

Company Overview

Recognizable by its iconic "Priceless" advertising campaign that has run in over 120 countries, Mastercard (NYSE:MA) operates a global payments network that connects consumers, financial institutions, merchants, and businesses, enabling electronic transactions and providing payment solutions.

Credit card companies facilitate electronic payments and extend revolving credit to consumers. Growth comes from increasing digital payment adoption, cross-border transaction growth, and value-added services for cardholders and merchants. Challenges include regulatory scrutiny of fees and practices, competition from alternative payment methods, and potential credit losses during economic downturns.

Mastercard's primary competitors include Visa, which operates the largest payment network globally, American Express, which uses a closed-loop network model, and regional players like China UnionPay, JCB (Japan Credit Bureau), and Discover. The company also faces competition from emerging payment technologies and fintech companies offering alternative payment methods.

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Mastercard’s revenue grew at an impressive 15.1% compounded annual growth rate over the last five years. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Mastercard’s annualized revenue growth of 13.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Mastercard reported year-on-year revenue growth of 16.7%, and its $8.60 billion of revenue exceeded Wall Street’s estimates by 0.8%.

The aggregate volume of transactions and loan originations processed by financial firms directly impacts their revenue and are fundamental to understanding their growth trajectories.

Mastercard’s volumes have grown at an annual rate of 26.8% over the last five years, much better than the broader financials industry and faster than its total revenue. When analyzing Mastercard’s volumes over the last two years, we can see its volumes dropped by 7.7% annually. Its recent performance could be a roadblock for any valuation multiple expansion.

In Q3, Mastercard’s volumes were $0.09, falling 3.9% short of analysts’ expectations. This print was 17.2% lower than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Credit Card companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, Mastercard’s pre-tax profit margin has fallen by 1.6 percentage points, going from 54.3% to 55.9%. However, fixed cost leverage was muted more recently as the company’s pre-tax profit margin was flat on a two-year basis.

In Q3, Mastercard’s pre-tax profit margin was 58.1%. This result was 5.7 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Mastercard’s EPS grew at a remarkable 19% compounded annual growth rate over the last five years, higher than its 15.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Mastercard, its two-year annual EPS growth of 17.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Mastercard reported adjusted EPS of $4.38, up from $3.89 in the same quarter last year. This print beat analysts’ estimates by 1.5%. Over the next 12 months, Wall Street expects Mastercard’s full-year EPS of $16.08 to grow 13.5%.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Mastercard has averaged an ROE of 163%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Mastercard has a strong competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Mastercard currently has $18.98 billion of debt and $7.90 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 2.6×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

Both revenue and EPS exceeded Wall Street’s estimates, albeit by a small magnitude. Zooming out, we think this was a decent quarter. The stock remained flat at $557.37 immediately after reporting.

Updated: December 4, 2025 at 11:39 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Mastercard, you should also grasp the company’s longer-term business quality and valuation.

There are multiple reasons why we think Mastercard is an elite financials company. First of all, the company’s revenue growth was impressive over the last five years. On top of that, its stellar ROE suggests it has been a well-run company historically, and its transaction volume growth was exceptional over the last five years.

Mastercard’s P/E ratio based on the next 12 months is 30.1x. There’s some optimism reflected in this multiple, but we don’t mind owning an elite business, even if it’s slightly expensive. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with relatively high valuations.

Wall Street analysts have a consensus one-year price target of $656.51 on the company (compared to the current share price of $542.58).