$329.23 2.3(0.7%) Volume: 456,250 9:30AM EST
Market Cap : 328.2 B
Mastercard Owner Earnings per Share (TTM)
: 6.08 (As of Sep. 2020)
In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:
"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."
Mastercard's Owner Earnings per Share (TTM) ended in Sep. 2020 was $6.08. It's Price-to-Owner-Earnings ratio for today is 54.15.
NYSE:MA' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 17.37 Med: 34.19 Max: 64.3
During the past 13 years, the highest Price-to-Owner-Earnings ratio of Mastercard was 64.30. The lowest was 17.37. And the median was 34.19.
NYSE:MA's Price-to-Owner-Earnings is ranked lower than
Mastercard's Earnings per Share (Diluted) for the three months ended in Sep. 2020 was $1.51. Its Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Sep. 2020 was $6.67. It's PE Ratio ratio for today is 49.36.
Mastercard's EPS without NRI for the three months ended in Sep. 2020 was $1.51. Its EPS without NRI for the trailing twelve months (TTM) ended in Sep. 2020 was $6.67. It's PE Ratio without NRI ratio for today is 49.36.
Mastercard Owner Earnings per Share (TTM) Historical Data
Owner Earnings per Share (TTM) 2.73 3.07 3.70 4.24 6.41
Mastercard Owner Earnings per Share (TTM) Distribution
* The bar in red indicates where Mastercard's Owner Earnings per Share (TTM) falls into.
Mastercard Owner Earnings per Share (TTM) Calculation
"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."
To make it simple, then you will have:
Owner Earnings per Share (TTM) = (Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)
Mastercard's Owner Earnings per Share (TTM) Calculation:
TTM / Last Quarter Average of Last 20 Quarters
Net Income 6,726
Depreciation, Depletion and Amortization 576
Change In Deferred Tax -14
5Y Average of Maintenance Capital Expenditure 491
Change In Working Capital -683
Shares Outstanding (Diluted Average) 1,005
1. Start with "Net Income" from income statement. Mastercard's Net Income for the trailing twelve months (TTM) ended in Sep. 2020 was $6,726 Mil.
2. "Depreciation, Depletion and Amortization" is from cashflow statement. Mastercard's Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2020 was $576 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.
3. Other non-cash charges usually include "Stock Based Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Stock Based Compensation back to net income. Mastercard's Change In Deferred Tax for the trailing twelve months (TTM) ended in Sep. 2020 was $-14 Mil.
4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $491 Mil
It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.
The following shows how to get maintenance capital expenditure.
First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Property, Plant and Equipment as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.
Mastercard's 5-Year Average Maintenance Capital Expenditure = $491 Mil
5. "Change In Working Capital" is from cashflow statement. Mastercard's Change In Working Capital for the trailing twelve months (TTM) ended in Sep. 2020 was $-683 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.
6. Mastercard's Shares Outstanding (Diluted Average) for the months ended in Sep. 2020 was 1005.000 Mil.
Mastercard's Onwer Earnings Per Share for Sep. 2020 is calculated as:
= ( Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax
= ( 6726 + 576 + -14
- 5Y Avg of Maintenance CAPEX + Change In Working Capital ) / Shares Outstanding (Diluted Average)
- 490.57101759248 + -683) / 1005.000
Price-to-Owner-Earnings = Current Price / Owner Earnings per Share (TTM)
= 329.230000 / 6.08
Assumption: Companies usually do not report maintenance capital expenditures and growth capital expenditures separately. Here we use estimated numbers and average them over 5 years. The method to estimate maintenance capital expenditures can be found in above part 4.
Note: GuruFocus' Change In Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And it includes non-current parts of assets and liabilities.
Mastercard Owner Earnings per Share (TTM) Related Terms
Mastercard Owner Earnings per Share (TTM) Headlines