Is Mastercard, Inc. overvalued or undervalued?

As of 1 May 2025, Mastercard, Inc. has moved from an expensive to a very expensive valuation grade. The company is currently overvalued based on its key financial ratios, including a P/E ratio of 60, a Price to Book Value of 124.73, and an EV to EBITDA of 50.27. These figures significantly exceed those of its peers, such as Visa, Inc. with a P/E of 33.34 and PayPal Holdings, Inc. with a P/E of 16.85, indicating that Mastercard's stock price is not justified by its earnings compared to its competitors.
In addition to its high valuation ratios, Mastercard's PEG ratio stands at 3.44, further suggesting that the stock is priced for growth that may not materialize. The company's return on equity (ROE) is exceptionally high at 206.96%, but this does not compensate for the elevated valuation metrics. Recent stock performance shows that Mastercard has underperformed the S&P 500 over the past month, with a return of -3.77% compared to the index's 3.83%, reinforcing the notion that the stock is overvalued in the current market environment.