Critical Review: Fiserv (NASDAQ:FISV) and Mastercard (NYSE:MA)

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

Volatility and Risk

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

Institutional & Insider Ownership

97.3% of Mastercard shares are owned by institutional investors. Comparatively, 91.0% of Fiserv shares are owned by institutional investors. 0.1% of Mastercard shares are owned by company insiders. Comparatively, 1.0% of Fiserv shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mastercard	$32.79 billion	14.24	$14.97 billion	$16.52	31.70
Fiserv	$21.19 billion	1.58	$3.48 billion	$6.34	9.87

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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Mastercard and Fiserv, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mastercard	0	2	16	6	3.17
Fiserv	2	24	10	0	2.22

Mastercard presently has a consensus price target of $669.27, suggesting a potential upside of 27.80%. Fiserv has a consensus price target of $109.74, suggesting a potential upside of 75.31%. Given Fiserv’s higher possible upside, analysts plainly believe Fiserv is more favorable than Mastercard.

Summary

Mastercard beats Fiserv on 13 of the 15 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 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.