Mastercard's moat score of 96 and management score of 100 point to a business with unusually durable advantages and highly efficient use of capital. Return on invested capital of 48.9% and a gross margin of 77.9% support that reading, and even with debt to equity at 2.5x, the combination suggests capital is being deployed effectively rather than propping up weak returns.
The margin of safety score sits at 49, and the gap shows up clearly in the numbers. Shares trade at $561.44 against a consensus buy price of $298.99, built from a growth rate of 15.0% even though the business has actually grown at 16.0% historically, a deliberately conservative input. The three individual valuation methods range from $189.41 to $298.99, all well below the current price of $561.44.
The tension is straightforward: the underlying business scores near the top of the range on quality and capital efficiency, but the current price already assumes a great deal of that quality continuing, at a premium to every valuation method shown here, with a free cash flow yield of just 3.3%.
| Price | $565.24 |
| Market cap | $495.7B |
| P/E ratio | 31.1x |
| Return on invested capital | 48.9% |
| Gross margin | N/A |
| Debt to equity | 2.46x |
| Free cash flow yield | 3.3% |
| Growth rate used | 15.0% |
| Growth rate measured | 16.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Mgmt | Margin of safety |
|---|---|---|---|
| Visa Inc. (V) | 81 | 100 | 34 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Mastercard Inc. rather than accepting ours.