Mastercard Inc (MA)

Conclusion

Mastercard Incorporated provides transaction processing and other payment-related products and services to account holders, merchants, financial institutions, businesses and governments, in the United States and internationally. At 655.81 USD on 2026-11-09, the market capitalisation is 567.1 billion USD.

The verdict is fair. The P/E of 33.4 is below its ten-year median of 40.0, and EV/EBITDA of 25.2 is below its median of 29.3, while P/B of 84.0 is above its median of 55.4. The DCF gives 567.36 USD per share, and the fair value from historical multiples is 703.18 USD. The fair value band runs from 508.22 to 762.32 USD with a midpoint of 635.27 USD, giving a margin of safety of -3.1% at the current price. The reverse DCF implies growth of 13.94% a year, against revenue growth of 16.5% over five years and free cash flow per share growth of 22.9%.

The strongest numbers are ROIC of 86.7% against a WACC of 8.7%, free cash flow conversion of 91.0% over the last twelve months, and a Piotroski score of 8 out of 9. The weakest are the current ratio of 1.01, which is on watch, the P/B of 84.0 against its median of 55.4, and a DCF in which 61.4% of the value sits in the terminal value.

Financial health

Financial health is grey because Mastercard is a financial business, where debt is part of its trade and the standard debt-based tests are not applicable. The company has a current ratio of 1.01, flagged as watch, and a quick ratio of 0.65. Net debt to EBITDA is 0.59 and interest coverage is 26.8 times, both assessed as fine. Debt to equity is high at 3.54. The Altman Z-score is 10.79, in the safe zone, though the model was designed for manufacturers and Mastercard is not one. The Ohlson model does not apply to a financial business, so no insolvency probability is given. Overall, the balance sheet does not raise concern on these measures, but the reader should weigh the high debt to equity and the watch-level current ratio.

Earnings quality

Earnings quality is green, supported by strong cash conversion and a clean accounting profile. Free cash flow conversion is 91.0% over the last twelve months and 106.0% over five years, and the accrual ratio is -5.2%. Stock-based compensation is 1.8% of revenue, and free cash flow after it is 14.79 billion USD. The share count fell at a compound rate of 2.1% over five years, which points to buybacks. The Piotroski score is 8 out of 9 and the Beneish M-score of -2.54 is in the unlikely range for manipulation. The company beat earnings estimates in all 8 recent quarters, with an average surprise of 4.8%. Analysts raised estimates for next year: the 90-day change is 0.64%, with 16 upward and 4 downward revisions in the last 30 days, and expected next-year growth is 15.5%.

Profitability

Profitability is green. The operating margin is 58.8% against a ten-year median of 55.3%, and the net margin is 46.7% against a median of 44.6%. The gross margin is 100%. Margins have been stable, with a stability measure of 5.5%. ROIC is 86.7% against a WACC of 8.7%, and the given ROIC minus WACC value is 78.1%, so the business creates value well above its cost of capital. Return on equity of 251.1% is inflated by leverage. The DuPont split shows a net margin of 45.7%, an asset turnover of 0.61 and an equity multiplier of 7.00, all for 2025. The return on equity is therefore driven mainly by the high equity multiplier, not by the margin alone.

Growth

Growth is green. Revenue has a compound growth rate of 13.8% over three years, 16.5% over five years and 13.0% over ten years. Earnings per share grew at 17.3% over three years, 21.0% over five years and 17.3% over ten years. Free cash flow per share grew at 20.4% over three years and 22.9% over five years. Revenue grew in 9 of the last 10 years. The growth has been consistent, and the five-year rates for revenue and free cash flow per share sit above the 13.9% growth implied by the current price in the reverse DCF.

Valuation

Valuation is yellow, neutral, because the fair value band midpoint of 635.27 USD sits slightly below the current price of 655.81 USD. Against their ten-year medians, the P/E is 33.4 against 40.0, a premium of -16.5%, and EV/EBITDA is 25.2 against 29.3, a premium of -13.9%. P/FCF is 36.7 against 37.1, and P/B is 84.0 against 55.4, a premium of 51.7%. The DCF gives 567.36 USD per share at a discount rate of 8.87%, with a terminal value share of 61.4%. The fair value from historical multiples is 703.18 USD. The reverse DCF implies growth of 13.94%, which is -2.53% against the five-year revenue growth and -8.93% against the five-year free cash flow per share growth. The fair value is an estimate built on fixed assumptions, not a price target. The dividend yield is 0.53% and the payout on free cash flow is 19.4%.

Risks

The weakest numbers would each pressure the company in a specific way. A current ratio of 1.01 with a quick ratio of 0.65 leaves little liquidity cushion if payment flows or settlement timing shift. Debt to equity of 3.54 means that any fall in equity from losses or large buybacks would raise leverage quickly. The P/B of 84.0, against a median of 55.4, suggests that the market already prices in a high return on a small equity base. A DCF with 61.4% of its value in the terminal value depends heavily on long-run assumptions, so a lower long-term growth rate would reduce it materially. The Ohlson insolvency estimate is not available because the model does not apply to a financial business. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot test refinancing risk or the mix of business lines.