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Mastercard (MA) Earnings More Than Double in First Quarter

MasterCard (MA) reported a huge boost in profits and revenue during its first quarter earnings announcement. The company seemingly scoffed at the notion of a credit crunch. Net income for the quarter ended March 31 was $446.9, or $3.38 per share. The incredible earnings report was a big driver of stock trading shortly following the announcement.

During the same quarter last year, MasterCard earned $214.9 million, or $1.57 per share. Revenue grew an incredible 29.2 percent for the quarter showing a strong increase in business demand for the company’s credit products. Revenue for the 2008 first quarter was $1.18 billion. Last year’s first quarter saw revenue of $915.1 million.

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MasterCard was another in a long line of global companies that indicated the weak dollar had a significant impact on revenue growth. The company credited the weak dollar for 5.1 percent of its revenue growth. The weak dollar helps companies that operate in countries with a stronger currency as they are able to exchange the stronger currency for more of the weaker dollar.

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Stock investing increases were likely more attributable to the company’s strong growth in business transactions and cross-border fees. These forms of revenue are more likely to prompt investors to add the company to their trading portfolio as they are more indicative of sold business growth.

The MasterCard share price has incredibly climbed nearly $60 in the last week and a half, as it is about to push up against its one year price target, just over $300 per share. After such a strong spike, it is likely the stock will be a target of covered call funds and covered call investing. Covered calls typically occur following strong surges in stock price that causes people to question a stock’s ability to continue the climb in the near-term.

MasterCard has traded with significant implied volatility over the last 52 weeks having moved from $120 to a high over $301. The stock has been on an incredible run just in the initial months of 2008. Many investors seem to be operating with long-term stock trading strategies as the company maintains investor commitment. The 60 cents per share annual dividend payout is a solid income for investors attracted to the company’s strong earnings and growth.

One reason for the growth in credit card transactions in recent months has been the fast and consistent easing of interest rates due to Fed fund rate cuts. Most large credit card companies have passed on the interest rate cuts to consumers, which has reduced some borrower’s interest rates by several percentage points. It is possible this growth effect that has given the stock help could reverse, prompting investors to flee.

While it is possible MasterCard could see a price dip in lieu of its current spike, such a dip would probably excite dip buyers, assuming the company continues strong. Savvy investors would likely jump in themselves and invite friends to get in on the action.

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[tags] MA, MasterCard Inc., covered call funds, covered call investing, covered call strategies, implied volatility, investing in stock options, poweroptions, stock help, stock investing, stock market help, stock market investment strategies, stock options, stock trading [/tags]

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