Where Will Mastercard Stock Be in 5 Years?

What five years could deliver

Suppose the pattern holds in roughly its current form — low-double-digit revenue growth, a slowly improving mix, and a share count that shrinks a few percent a year. Earnings per share compounding around 15% annually would roughly double over five years, to somewhere near $36 to $38 by mid-2031.

That wouldn’t be new, either. After all, Mastercard’s earnings per share have roughly doubled over the past five years.

Then comes the valuation multiple, which is the bigger swing factor. At Friday’s close of $573.10, Mastercard trades at about 32 times earnings. A network business with these economics has arguably earned a premium price, but five years is long enough for that premium to compress. Apply 25 to 32 times to about $37 of earnings, and the range runs from roughly $925 to $1,180.

So here’s my answer. I’d expect Mastercard stock to trade between $900 and $1,200 by mid-2031, and something around $1,050 seems most likely. That works out to roughly 12% to 13% a year, plus the small dividend — steady compounding rather than fireworks.

However, the risks deserve naming. Regulators keep pressuring network fees, stablecoins and account-to-account payment systems are serious attempts to route around card networks, and a global consumer slowdown would slow every number above at once.

Say growth slows to 8% or 9% a year and the valuation multiple compresses to 22. The stock would sit near $600 in 2031, barely ahead of where it trades today. That’s my bear case, and it’s the main reason I wouldn’t call the stock cheap at 32 times earnings.

But this is a business I’d rather own than bet against. Payment volumes have generally grown across economic cycles, the services mix gives Mastercard a second growth engine, and the buyback quietly compounds everything else.

So, I’d buy the stock here and plan on holding it through 2031. If cross-border volume or value-added services growth stalled for more than a quarter or two, I’d rethink the range. Otherwise, I’d simply leave it alone.

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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard. The Motley Fool has a disclosure policy.

Where Will Mastercard Stock Be in 5 Years? was originally published by The Motley Fool