Analysis: MA V

Before Thursday's opening bell, Mastercard (MA)  will report its June-quarter results, which are expected to clock in with earnings per share of $2.35 on $5.25 billion in revenue, up 20% year-over-year. Throughout the June quarter, the company's monthly SpendingPulse reports have been a must read for us, and they have pointed to continued spending, despite concerns over inflation and the speed of the economy. Laying the groundwork for this latest quarterly earnings report from Mastercard was the better-than-expected June quarter results from Visa (V) . Visa's payments volume rose 12% year-over-year in constant dollars with cross-border volume up 40% and processed transactions up 16%. On its earnings conference call, Visa shared that so far it is seeing "no evidence of a pullback in consumer spending" and sees its net revenue for the current quarter growing "at the high teens to 20% range in constant dollars."

There is a high degree of likelihood that Mastercard will reiterate those comments tomorrow morning, which would reinforce the expected 17% revenue growth this year based on consensus expectations. Of course, we'll be reading and listening for any pockets of concern about consumer spending keeping in mind that Mastercard derives about one-third of its revenue for the U.S. and the balance from international markets vs. Visa's 42% revenue exposure to the U.S. and the remaining 58% from non-U.S. markets.

During its March quarter, the company repurchased $2.4 billion in stock, roughly 6.8 million shares, leaving its share count at 967 million outstanding vs. 972 million exiting 2021 and 995 million at the end of the June 2021 quarter. Exiting the March 2022 quarter, Mastercard had $9.5 billion left on its current share repurchase authorization; given the almost 12% drop in the shares during 2Q 2022, it stands to reason the company continued to be active in buying back stock in the quarter.

At the time of publication, AAP was long MA.