Mastercard Inc (MA) Common Stock

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Mastercard’s fourth-quarter revenue grew 15% to $8.8bn, ignoring currency movements, in line with guidance. Within that, value-added services led the way with 22% growth. Payment network revenues were up 9%, with all regions in positive territory.

Underlying operating profit grew 21% to $5.1bn (3% ahead of consensus), as topline growth outpaced costs.

Full-year free cash flow was up from $14.3 to $17.2bn, largely driven by profit growth. Mastercard ended the year with net debt of $8.4bn.

Share buybacks and dividends for the quarter came to $3.6bn and $0.7bn, respectively.

2026 guidance was in line with consensus forecasts, with net revenue to grow around 11%-12% and costs by about 10-11% on an underlying basis.

The shares rose 4.3% on the day of the announcement.

Our view

Mastercard’s fourth quarter results were steady if not spectacular. But with sentiment weak in the run-up to publication, that was enough to lift investors’ mood on the day. The recurrent themes we’ve highlighted, namely strength in the services division and diversification in markets outside the United States, were on show for all to see.

Management is committed to deepening its reach with consumers, vendors and financial institutions, and we support the decision to reduce headcount by around 4% and sharpen the focus on areas where it sees value. It will take some time until the success of this action can be measured, and in the immediate future there’s an extra cost, but Mastercard is well placed to absorb the $200mn restructuring charge.

Card usage continues to grow, helped by the rise of contactless payments and digital wallets. The threat of technological disruption is one to watch, but Mastercard’s enormous scale also positions it as an enabler of change. The group’s shown it’s not afraid to move with the times, securing key partnerships with the likes of Apple and cryptocurrency payment provider Ripple. This scale also provides an opportunity to capture a bigger part of the value chain within each transaction.

Services are an important and faster-growing part of the business and one where Mastercard appears to be stealing an edge over its rivals. Its cybersecurity and data analytics capabilities leave it well placed to deepen its relationships with vendors as artificial intelligence adoption changes the way they engage with retailers.

There’s also rising political pressure in the US to bring down credit card fees. If this happens, it would likely see lenders become stricter about the number of credit cards they issue, which could drag on Mastercard’s transaction volumes. Processing fees are also targeted by the Trump administration, but there are significant obstacles to enacting these measures.

However, Mastercard has a more even geographical mix than its main rival Visa, which is particularly dominant in the United States, where cash-to-card migration has all but run its course. That gives it more exposure to overseas markets where there’s still an underlying tailwind blowing in Mastercard’s favour.

We think Mastercard’s growth prospects look better than much of the competition, due to some of the structural differences discussed above. That’s reflected by growth forecasts ahead of the peer group in both the short and medium-terms. The regulatory spotlight has seen the valuation come under pressure, and we can’t rule out the possibility of further ups and downs. However, with the business in good shape and innovation high on the agenda, we see some attractive upside on offer for those willing to tolerate that risk.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

Previous Mastercard Inc updates