Excellent detailed look at one of the world's best businesses. My key takeaways from your analysis:
- strong moat of scale, special knowledge and enormous customer base
- dominant player in Europe, number two in US
- 58% return on capital employed (!!!)
- revenue and earnings growth sustainable at 10% and up
- token technology by 2030 should cut fraud losses in online transactions by at least two thirds
- data insights business has huge potential and is growing nicely
- commendable record of returning free cash flow to shareholders
- dividend increases every year, averaging 15%
- has retired 30% of shares since 2010 and could retire another 4% in 2025
- since 2006 IPO, has returned $83 billion to shareholders
- expensive at current price but a no-brainer long term buy and hold if there is price weakness that is not justified by events
- 58% return on capital is an invitation to upstarts to compete for MasterCard's business. There are a lot of Fintech firms interested in taking this business. Affirm, Nu, Dave, Mercado Libre and so on. Any of those could find the formula that lets them eat MasterCard (and Visa) from below by disruption. Some of them are diligently looking for exactly that formula.
Mastercard is a fantastic business but they'll need to stay sharp to keep it.
Mastercard is certainly a very good company, but I see the financial sector in a state of upheaval. many rigid structures at the big tankers do not allow a quick adaptation to market conditions and such a company prefers to follow well-trodden paths rather than new ones. mastercard will have to defend its competitive advantage with a lot of cash at great expense. that's my view.
I see what you mean, but I am not sure if that is relevant to Mastercard. The company always tends to be a frontrunner in innovation and is highly active when it comes to M&A to fight threats to its business from emerging fintech players.
I think you make a fair point and it is a risk, but I don't think it is highly relevant for Mastercard.
Keep both with Visa)
Excellent detailed look at one of the world's best businesses. My key takeaways from your analysis:
- strong moat of scale, special knowledge and enormous customer base
- dominant player in Europe, number two in US
- 58% return on capital employed (!!!)
- revenue and earnings growth sustainable at 10% and up
- token technology by 2030 should cut fraud losses in online transactions by at least two thirds
- data insights business has huge potential and is growing nicely
- commendable record of returning free cash flow to shareholders
- dividend increases every year, averaging 15%
- has retired 30% of shares since 2010 and could retire another 4% in 2025
- since 2006 IPO, has returned $83 billion to shareholders
- expensive at current price but a no-brainer long term buy and hold if there is price weakness that is not justified by events
- 58% return on capital is an invitation to upstarts to compete for MasterCard's business. There are a lot of Fintech firms interested in taking this business. Affirm, Nu, Dave, Mercado Libre and so on. Any of those could find the formula that lets them eat MasterCard (and Visa) from below by disruption. Some of them are diligently looking for exactly that formula.
Mastercard is a fantastic business but they'll need to stay sharp to keep it.
They definitely do, and they know it!
Great highlight summary!
Mastercard is certainly a very good company, but I see the financial sector in a state of upheaval. many rigid structures at the big tankers do not allow a quick adaptation to market conditions and such a company prefers to follow well-trodden paths rather than new ones. mastercard will have to defend its competitive advantage with a lot of cash at great expense. that's my view.
I see what you mean, but I am not sure if that is relevant to Mastercard. The company always tends to be a frontrunner in innovation and is highly active when it comes to M&A to fight threats to its business from emerging fintech players.
I think you make a fair point and it is a risk, but I don't think it is highly relevant for Mastercard.