MasterCard Inc. shares rose to their highest level in nearly three years Tuesday after the payment processor posted a higher-than expected first-quarter profit.
The company also reported consumers continue to swipe credit and debit cards more frequently despite higher gasoline and food prices.
MasterCard also benefited from a global economic recovery that's driving faster growth in card use overseas than in the U.S., despite Japan's natural disaster and nuclear crisis, and heightened political unrest in the Middle East.
Shares of MasterCard rose $7.09, or 2.6 percent, to close at $282.38 Tuesday, after climbing as high as $286.80 earlier in the session. The stock last traded at that level on June 25, 2008, before the financial crisis.
Chief Financial Officer Martina Hund-Mejean told analysts that card use rose at a slightly faster rate in the first four weeks of April compared with the first quarter, despite consumer pressures including higher food costs and gas hitting nearly $4 a gallon in the U.S.
However, Hund-Mejean warned that a prolonged rise in prices could begin to hurt MasterCard.
"Over the long term, the inflation could be crowding out other discretionary purchases that people can be making," she told a conference call.
There's little sign of that happening so far. MasterCard said its net income rose to $562 million, or $4.29 per share, in the three months ended March 31. That was up from $455 million, or $3.46 per share, that the Purchase, N.Y.-based company reported in the same period last year.
Revenue rose 15 percent to $1.50 billion, with about 60 percent of revenue coming from outside the U.S.
On average, analysts polled by FactSet expected earnings of $4.08 per share on revenue of $1.45 billion.
Purchase volume increased 13 percent from the year-ago quarter to $545 billion. Much of that growth came from outside the U.S. Purchase volume worldwide excluding the U.S. increased 16.5 percent. U.S. purchase volume rose 7.4 percent.
The company also noted its revenue growth was helped by more consumers traveling across borders and using credit and debit cards. That type of spending jumped 18.5 percent during the period.
The number of transactions MasterCard handled rose 11 percent to 6 billion.
Debit purchases, where MasterCard lags its larger rival Visa Inc., were up 16.3 percent globally.
Credit card purchase volume increased 11.7 percent. The U.S. posted the smallest increase in credit card purchase volume at just 4.9 percent, compared with a 14.6 percent gain worldwide.
President and CEO Ajay Banga said he remains "cautiously optimistic" about global economic prospects. However, he said he worries about persistently high unemployment in the U.S., and the prolonged housing market slump.
MasterCard expects revenue to grow 12 percent to 14 percent this year, with a slightly higher growth rate in the second half of the year than in the first. The company expects earnings per share to rise at least 20 percent this year.
On average, analysts expect full-year revenue of $6.19 billion, implying growth of nearly 12 percent, and a full-year profit of $16.71 per share, a growth rate of 19 percent over last year.
Banga told analysts he is closely watching new rules that will limit the amount merchants must pay for debit card transactions, but doesn't expect any impact on MasterCard until at least next year. Banga said he had little new information on whether the Federal Reserve or Congress might delay a July implementation timeline for the rules.
The proposed rule would cut those fees to 12 cents per transaction, from an average of 44 cents for PIN-based purchases and 56 cents for signature-based purchases.
The rules would not directly hit the processors, but would erode revenue for the card-issuing banks using the processors' payment networks. Until the issue is resolved or the rule is scrapped, investors are uncertain whether banks will demand changes in their contracts with Visa and MasterCard, charge fees for card use or even scrap debit cards altogether. All of these options could hurt processors.
Visa is scheduled to report first-quarter results after markets close Thursday. Analysts expect the San Francisco-based company to report earnings of $1.20 per share, on revenue of $2.23 billion, on average.
AP Business Writer Janna Herron contributed to this report from New York.