At today's price, Mastercard's stock is pricing in about 12.3% annual free-cash-flow growth for the next ten years — below its actual 5-year FCF growth (17.4% a year), but almost exactly matching the roughly 12% revenue growth the company has posted in its two most recent quarters.
At its current price, MA implies ~12.3% annual FCF growth for the next 10 years, discounted at 9%.
Mastercard's actual FCF growth has averaged 17.4% a year over the past 5 years — well above what the price requires; its most recent two quarters' revenue growth (~12%) matches the market's ask almost exactly.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical figures from 10-K FY2021-FY2025 and Q1-Q2 FY2026 earnings calls.
Sensitivity: what if the discount rate moves?
| WACC | Required growth |
|---|---|
| 7% | 7.1% |
| 8% | 9.9% |
| 9% (base case) | 12.3% |
| 10% | 14.6% |
| 11% | 16.6% |
| 12% | 18.6% |
At the lower end tested (7-8%), the required growth rate sits well below even the recent slower pace, making today's price look reasonably conservative. Push the discount rate up to 11-12%, and the required rate meets or exceeds the full 5-year FCF CAGR (17.4%) — a single assumption swings the read from "cheap" to "expensive."
What would move this number
- Using FY2025's full-year FCF ($16.4B) instead of the trailing-twelve-month figure used here ($15,975M) lowers the required growth rate slightly, from 12.3% to 11.9%.
- Lowering the terminal growth rate from 2.5% to 2.0% raises the required rate to 13.0%; raising it to 3.0% lowers it to 11.6%.
- The single biggest lever is the discount rate itself — see the sensitivity table above, where a WACC anywhere from 7% to 12% moves the required growth rate by more than 11 percentage points.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$588.14 — stockanalysis.com, Sept 2, 2026 close
- Diluted shares outstanding876.0M — stockanalysis.com, Sept 2, 2026
- Market cap$515.2B — price × diluted shares
- Net debt$13.0B — 10-Q (Jun 30, 2026): $24,643M total debt minus $11,291M cash minus $318M short-term investments
- Base FCF (trailing twelve months)$15,975M — 10-K FY2025 plus 1H FY2026 10-Q minus 1H FY2025 10-Q, operating cash flow minus (capex plus capitalized software)
- Discount rate (WACC)9% base case (7%/8%/10%/11%/12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization check: TTM FCF ($15,975M) is +17.1% above the 3-year average ($13,637M) — within the ±40% threshold, so used as-is without adjustment.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's target enterprise value (market cap plus net debt).
Historical CAGR check: 5-yr FCF CAGR (2021→2025) = 17.4%. 3-yr FCF CAGR (2022→2025) = 17.6%. 5-yr revenue CAGR (2021→2025) = 14.8%.
The fine print
- This isn't a fair-value price target — it only shows what the current price already assumes.
- Change the discount rate or the FCF base, and the answer moves substantially — see the sensitivity table above.
- Whether 12.3% growth is realistic depends on whether Mastercard's recent deceleration to ~12% growth is temporary or structural — not on this math alone.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does MA's stock price assume?
At today's price, Mastercard's stock is pricing in about 12.3% annual free-cash-flow growth for the next ten years, at a 9% discount rate.
How does that compare to Mastercard's actual growth?
Mastercard's actual 5-year FCF CAGR was 17.4% a year and its 5-year revenue CAGR was 14.8% — both above the 12.3% the current price requires. But its two most recent quarters' constant-currency revenue growth (~12%) landed almost exactly at that required rate.
What share price was used for this analysis?
This analysis used $588.14, as of the Sept 2, 2026 close.