Key Takeaways
- • Bill Ackman said on CNBC's Squawk Pod that he bought Visa and Mastercard in the low 20s times earnings, describing them as a royalty on consumer spending and "one of the greatest businesses in the world."
- • Analysts expect Mastercard's normalized EPS to grow about 16% a year from 2026 to 2028, from $20.04 to $26.89, versus roughly 14% a year for Visa.
- • Mastercard's forward P/E has recovered to 30x from a 23x low in June, still slightly below its five-year average of 31x and well under the 38x peak of early 2022.
- • Q3 net revenue rose 14% to $9.81 billion, with services up 19% on a currency-neutral basis, while rebates and incentives reached 52.4% of gross network fees in Q2 2026.
- • Both networks remain exposed to consumer spending, so the valuation case depends on estimates holding up in the Q4 report and 2027 outlook.
Summary
Bill Ackman said on CNBC's Election Day episode of Squawk Pod that the market in 2026 had focused on chips and semiconductors while other businesses were "sort of ignored," allowing him to buy companies he had long wanted but considered too expensive. He named Visa and Mastercard, calling them "a royalty on people spending money" and "one of the greatest businesses in the world." He said the networks had been "well into the 30s times earnings" and were picked up in the low 20s.
According to TIKR consensus estimates, analysts expect Mastercard's normalized EPS to rise from $17.01 in 2025 to $26.89 in 2028, implying roughly 16% annual growth from the expected $20.04 this year. Visa's earnings are expected to grow from $13.27 in its fiscal year ended September to $17.13 in fiscal 2028, or about 14% a year. The two companies' fiscal years do not align exactly.
Mastercard's growth is supported by services and margins. Net revenue in Q3 rose 14% to $9.81 billion, and services grew 19% on a currency-neutral basis. The adjusted operating margin increased from 58.0% in 2023 to 59.2% in 2025 and reached 61.0% in the first half of 2026. Mastercard's forward P/E bottomed at 23x in June and has returned to 30x, a little below its five-year average of 31x and well short of the 38x reached in early 2022. The stock is up 15% over the past month and trades 2% below its 52-week high.
The article notes risks to the thesis. Both networks depend on consumer spending, so a pullback would likely reduce estimates for both. Mastercard is also returning more to issuing banks: rebates and incentives absorbed 52.4% of gross network fees in Q2 2026, up from 49.9% a year earlier. New CFO Ling Hai said that share would be higher in Q4 than in Q3, and warned that part of the Q3 beat was pulled forward from Q4. The Q4 report in late January and the first full-year 2027 outlook will indicate whether the projected growth pace holds.
According to TIKR consensus estimates, analysts expect Mastercard's normalized EPS to rise from $17.01 in 2025 to $26.89 in 2028, implying roughly 16% annual growth from the expected $20.04 this year. Visa's earnings are expected to grow from $13.27 in its fiscal year ended September to $17.13 in fiscal 2028, or about 14% a year. The two companies' fiscal years do not align exactly.
Mastercard's growth is supported by services and margins. Net revenue in Q3 rose 14% to $9.81 billion, and services grew 19% on a currency-neutral basis. The adjusted operating margin increased from 58.0% in 2023 to 59.2% in 2025 and reached 61.0% in the first half of 2026. Mastercard's forward P/E bottomed at 23x in June and has returned to 30x, a little below its five-year average of 31x and well short of the 38x reached in early 2022. The stock is up 15% over the past month and trades 2% below its 52-week high.
The article notes risks to the thesis. Both networks depend on consumer spending, so a pullback would likely reduce estimates for both. Mastercard is also returning more to issuing banks: rebates and incentives absorbed 52.4% of gross network fees in Q2 2026, up from 49.9% a year earlier. New CFO Ling Hai said that share would be higher in Q4 than in Q3, and warned that part of the Q3 beat was pulled forward from Q4. The Q4 report in late January and the first full-year 2027 outlook will indicate whether the projected growth pace holds.
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