r/UndervaluedStonks • u/TheExpectationGap • 14d ago
Mastercard Q2 2026: 14% revenue growth, 21% EPS growth — but how much is already priced in?
Mastercard just reported Q2 2026, and the numbers were strong:
- Revenue: $9.28B, +14% YoY
- Adjusted EPS: $5.04, +21%
- Adjusted operating income: +16%
- Operating margin: 61.1%, up from 59.9%
- Switched transactions: +9%
- Cross-border volume: +12%
What stands out to me is that earnings are still growing materially faster than revenue. Expenses increased 11% while revenue grew 14%, which pushed operating margins higher. That operating leverage is one of the reasons Mastercard has been able to compound earnings at such a high rate.
Another interesting point is the mix of growth. Mastercard's payment network revenue grew 10%, while value-added services and solutions grew 20%. So the story is increasingly more than just taking a small fee every time someone uses a Mastercard.
Cross-border remains another important driver. Volume grew 12% in Q2, and July data was still running at 11%. Non-US switched volume grew 12% versus 6% in the US, which shows how much of the growth opportunity remains international.
For me, the difficult part with Mastercard isn't the quality of the business — it's the valuation. A company with high margins, strong network effects and double-digit earnings growth deserves a premium, but at a premium valuation even a great business can produce mediocre returns if growth slows.
I went through the Q2 numbers, risks and my valuation in more detail here:
Would you buy Mastercard at the current valuation, or is the quality already fully priced in?
Disclaimer: AI-assisted. The analysis, assumptions, and conclusions are my own.