Is Mastercard Stock a Buy?

With a trailing five-year return of 88% (as of Sept. 19), (NYSE: MA) shares have outperformed the S 500 and the Nasdaq Composite Index during that time. That momentum has continued in the past three- and six-month periods as well. Those strong gains could entice some investors to add this winner to their portfolios. 

Shares have performed so well in the past because of Mastercard's impressive financial performance. Revenue growth has averaged more than 12% between 2017 and 2022. But even more exciting is the operating leverage inherent in the business model. Because processing every additional transaction on the payments network has almost no cost, Mastercard has been able to increase its bottom line at a rapid clip. Diluted earnings per share in 2022 totaled $10.22, a huge improvement from $3.65 in 2017. 

The key to this solid growth momentum is the ongoing secular trend of cashless transactions and digital payments. Consumers love using their credit cards thanks to the perks and benefits offered, as well as the added convenience of not having to carry lots of cash around. Cash is still a popular way to complete transactions not only in the U.S. but in many parts of the world. This means Mastercard has a lot of growth potential. 

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Source Fool.com