By Jonathan Chen, Benzinga

MasterCard (MA) shares soared almost 8% in early trading Wednesday after the credit card processing company reported better-than-expected​ earnings.

The company has blown out earnings estimates for two consecutive quarters.

MasterCard reported $5.63 per share in profit on $1.82 billion in revenue. Wall Street had expected $4.82 per share on $1.71 billion in revenue. The company said the growth was helped primarily by debit card spending as consumers continued to favor the cards over other types of payment.

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"Economic indicators across the world remain mixed, with the uncertainties in Europe and the United States weighing on sentiment and dominating headlines," said Ajay Banga, MasterCard's chief executive. "Nonetheless, we continue to focus on displacing cash and winning share across markets."

The results continue to prove that the Durbin amendment, which capped debit card fees for merchants, has had little impact on MasterCard's operations and ability to generate incredibly strong earnings and revenue growth. The company saw an 18.1% increase in gross dollar-volume purchases, to $844 billion. It also saw an increase of 20.5% year over year in processed transactions.

MasterCard is sitting near 52-week highs, and shares are up 60% this year, far outpacing the S&P 500 and competitor Visa (V). Visa has returned 32.21% this year so far.

MasterCard's business model has proved to be one of the most effective and rewarding for shareholders in quite some time. The company was able to grow earnings 42.8% year over year, and revenue grew 27.2% year over year, which is incredible for a company its size. It is not expensive either, trading at 16 times projected forward earnings. It also offers a fractional dividend, but shareholders are in this name for capital appreciation, not dividend income.

The company has also generated an incredibly strong 43.8% return on equity and a 23.6% return on assets. Compare that to Visa, which has a 14.2% return on equity and a 10.6% return on assets. MasterCard has $3.6 billion in cash on the books and zero debt.

MasterCard has continued to prove, since its initial public offering in 2006, that it is the dominant leader in this space, with more growth than Visa and a stronger-than-expect​ed international arm. After this earnings report, one could definitely make the case for saying: "Relax, you have MasterCard."

ACTION ITEMS

Bullish
Traders who believe that U.S. consumers are spending more and more with credit cards might want to consider the following trades: 

• Add to MasterCard on any dips. It's clear that MasterCard has continued to prove the doubters wrong and will continue to do so.

• Traders may also want to look at Visa, which reported earnings on October, 26. They could see a boost from MasterCard's earnings.

Bearish
This continues to be bearish for checks, cash and other forms of currency. As the years continue, older forms of payment continue to be phased out. England is going to get rid of checks altogether in the next few years and it looks as if the U.S. is going to do the same as well. 

Neither Benzinga nor its staff offers investment advice, nor do they recommend that you buy, sell or hold any security. 

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