Mastercard Inc.'s forecast for current-quarter revenue growth fell short of Wall Street expectations, escalating worries that the card company would face significantly harsher conditions in 2023 as the economy faltered.
With widespread layoffs and consumer apprehension over a potential recession, the economy has started to show some indications of slowing down after the Federal Reserve raised rates for most of last year. A large corporation like $MA won't have the fastest rate of return on investment. What a large company might lack in aggressive expansion can more than makeup for a successful business. Mastercard only pays a dividend that yields 0.6% annually despite having such strong margins.
However, the business does buy back a significant share to reward shareholders. Mastercard announced a $9 billion repurchase program, which will support the increase of the company's adjusted earnings per share increase in the following quarters.
Additionally, markets outside the US account for a more significant portion of Mastercard's revenue. Depending on how the global economy performs over the coming year and how trends play out in various regions, this may very well be a drawback in the short term. Still, Mastercard's business' geographic distribution may also position it better to benefit from the expansion of the world middle class in the long run.
$MA is poised to grow in the foreseeable future due to its solid competitive stance and alluring long-term growth prospects. Mastercard has a forward price-to-earnings ratio of about 36, with favorable long-term prospects.
Source: Yahoo Finance