Analyzing Mastercard (NYSE:MA) & FirstCash (NASDAQ:FCFS)

Mastercard (NYSE:MA) and FirstCash (NASDAQ:FCFS) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mastercard	45.88%	212.96%	30.50%
FirstCash	9.15%	18.68%	8.18%

Risk and Volatility

Mastercard has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.

Insider and Institutional Ownership

97.3% of Mastercard shares are owned by institutional investors. Comparatively, 80.3% of FirstCash shares are owned by institutional investors. 0.1% of Mastercard shares are owned by insiders. Comparatively, 2.9% of FirstCash shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Mastercard and FirstCash”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mastercard	$32.79 billion	13.50	$14.97 billion	$17.28	28.99
FirstCash	$3.66 billion	2.63	$330.38 million	$7.98	27.55

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

Analyst Recommendations

This is a summary of recent ratings for Mastercard and FirstCash, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mastercard	1	1	20	6	3.11
FirstCash	0	1	3	2	3.17

Mastercard presently has a consensus target price of $656.04, suggesting a potential upside of 30.95%. FirstCash has a consensus target price of $198.00, suggesting a potential downside of 9.92%. Given Mastercard’s higher probable upside, equities analysts clearly believe Mastercard is more favorable than FirstCash.

Dividends

Mastercard pays an annual dividend of $3.48 per share and has a dividend yield of 0.7%. FirstCash pays an annual dividend of $1.68 per share and has a dividend yield of 0.8%. Mastercard pays out 20.1% of its earnings in the form of a dividend. FirstCash pays out 21.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Mastercard has raised its dividend for 13 consecutive years and FirstCash has raised its dividend for 8 consecutive years.

Summary

Mastercard beats FirstCash on 15 of the 18 factors compared between the two stocks.

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.

About FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.