Critical Analysis: Mastercard (NYSE:MA) vs. Fiserv (NASDAQ:FISV)

Fiserv (NASDAQ:FISV) and Mastercard (NYSE:MA) are both large-cap business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Valuation and Earnings

This table compares Fiserv and Mastercard”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fiserv	$21.19 billion	1.59	$3.48 billion	$6.34	9.96
Mastercard	$32.79 billion	14.19	$14.97 billion	$16.52	31.59

Mastercard has higher revenue and earnings than Fiserv. Fiserv is trading at a lower price-to-earnings ratio than Mastercard, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fiserv and Mastercard’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fiserv	16.42%	18.39%	5.90%
Mastercard	45.65%	203.92%	29.74%

Volatility and Risk

Fiserv has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, Mastercard has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.

Insider & Institutional Ownership

91.0% of Fiserv shares are held by institutional investors. Comparatively, 97.3% of Mastercard shares are held by institutional investors. 1.0% of Fiserv shares are held by insiders. Comparatively, 0.1% of Mastercard shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Fiserv and Mastercard, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fiserv	2	24	10	0	2.22
Mastercard	0	2	17	6	3.16

Fiserv presently has a consensus price target of $109.74, indicating a potential upside of 73.75%. Mastercard has a consensus price target of $670.61, indicating a potential upside of 28.51%. Given Fiserv’s higher possible upside, analysts clearly believe Fiserv is more favorable than Mastercard.

Summary

Mastercard beats Fiserv on 13 of the 15 factors compared between the two stocks.

About Fiserv

Fiserv, Inc., together with its subsidiaries, provides payments and financial services technology services in the United States, Europe, the Middle East and Africa, Latin America, the Asia-Pacific, and internationally. It operates through Merchant Acceptance, Financial Technology, and Payments and Network segments. The Merchant Acceptance segment provides merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; Clover, a cloud based POS and integrated commerce operating system for small and mid-sized businesses and independent software vendors; and Carat, an integrated operating system for large businesses. This segment distributes through various channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions, and other strategic partners in the form of joint venture alliances, revenue sharing alliances, and referral agreement. The Financial Technology segment offers customer deposit and loan accounts, as well as manages an institution's general ledger and central information files. This segment also provides digital banking, financial and risk management, professional services and consulting, check processing, and other products and services. The Payments and Network segment offers card transactions, such as debit, credit, and prepaid card processing and services; funds access, debit payments, cardless ATM access, and surcharge-free ATM network; security and fraud protection products; card production; print services; and various network services, as well as non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. It serves merchants, banks, credit unions, other financial institutions, and corporate clients. Fiserv, Inc. was incorporated in 1984 and is headquartered in Milwaukee, Wisconsin.

About Mastercard

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The company offers integrated products and value-added services for account holders, merchants, financial institutions, digital partners, businesses, governments, and other organizations, such as programs that enable issuers to provide consumers with credits to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid programs services; and commercial credit, debit, and prepaid payment products and solutions. It also provides solutions that enable businesses or governments to make payments to businesses, including Virtual Card Number, which is generated dynamically from a physical card and leverages the credit limit of the funding account; a platform to optimize supplier payment enablement campaigns for financial institutions; and treasury intelligence platform that offers corporations with recommendations to enhance working capital performance and accelerate spend on cards. In addition, the company offers Mastercard Send, which partners with digital messaging and payment platforms to enable consumers to send money directly within applications to other consumers; and Mastercard Cross-Border Services enables a range of payment flows through a distribution network with a single point of access to send and receive money globally through various channels, including bank accounts, mobile wallets, cards, and cash payouts. Further, it provides cyber and intelligence solutions; insights and analytics, consulting, marketing, loyalty, processing, and payment gateway solutions for e-commerce merchants; and open banking and digital identity services. The company offers payment solutions and services under the MasterCard, Maestro, and Cirrus name. Mastercard Incorporated was founded in 1966 and is headquartered in Purchase, New York.