According to its recent third-quarter earnings report, MasterCard's customers aren't aware of any credit crunch. The company today reported a 63% boom in third-quarter net income, as well as a 20% rise in revenue.
Including an after-tax gain of 51 cents a share from the partial sale of Brazilian Redecard, MA posted net income of $314.5 million, or $2.31 a share, compared to $193 million, or $1.42 a share, a year ago. Worldwide spending on MasterCard-branded cards gained 13%, and 878 million more branded cards were issued in the quarter.
Wondering how credit-card companies can profit in the midst of a housing slump and declining consumer spending? It's because the companies don't actually issue the cards - the banks do. MasterCard's partner banks issue the actual credit to customers; MA profits solely on the fees from transactions.
MasterCard is expecting to keep raking in the dough, too, as the Nilson Report predicts consumers will be making more than half their purchases with cards instead of cash or checks by 2010. (Note to self: What is this cash they speak of? Could it be that green stuff those freaks use in the grocery store checkout line?)
Historically, the credit-card processor has done extremely well. Since going public in May 2006, the stock has muscled more than 500%. Analysts presumably expect the trend to continue, as 15 of the 16 Zacks analysts rate MA a hold or better.
Today, MasterCard shares have rocketed more than 18% higher to hit a new all-time high of $186.19. The stock is currently trading at $184.80, up 27.65 points.