Should I Buy Macquarie Bank Shares, MQG Share Price

In these tough times, MQG has achieved record-breaking profits. They have delivered returns of 56.70% per year to investors over the previous ten years. At the current prices Should I Buy Macquarie Bank Shares?

MQG Share Price

Much like the rest of the market MQG shares have now fully recovered from the COVID Crash, and are now pushing all-time highs. At the time of writing MQG is priced at $153.71. Their share price is up 10.72% over the last 6-months and up 22.79% over the last 12 months. These results are largely in line with the market average being up 21.73% in the last year.

MQG has dropped off slightly from its all-time high in May, their 52-week range is 118.36-162.06. Its current market capitalization is $56.6 Billion.

Over the past 10-years, MQG has made excellent returns for investors with their share price increasing 466.92%. Each year the share price has made an average gain of 41.66%, while also averaging a dividend yield of 15.04% over a ten-year period. Investors have enjoyed a 56.70% return averaged over the long term.

Should I Buy Macquarie Bank Shares: About

Macquarie Group is an international company in the financial services space. They operate in 32 markets in asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advisory, capital raising, and principal investment.

Macquarie began on the 10th December 1969, under their predecessor organization, Hill Samuel Australia, providing advisory and investment banking services to the Australian market. Today the group has a history of 52-years of unbroken profitability.

Macquaries Businesses:

Macquarie Asset Management – A top 50 global asset manager, managing over $495 billion of assets on behalf of superannuation funds and other institutional investors Macquarie Asset Management oversees three stand-alone businesses:

  • Macquarie Infrastructure and Real Assets (MIRA)
  • Macquarie Investment Management (MIM)
  • Macquarie Specialised Investment Solutions (MSIS)

Banking and Financial Services – This is Macquarie’s retail banking business that provides personal banking, wealth management, and business banking products.

There are two capital markets facing businesses:

Commodities and Global Markets – Conducts market research on behalf of clients covering equities, derivatives, fixed income, foreign exchange, and commodities.

Macquarie Capital – Advisers and facilitates the listing of companies on the share market, and provides other Investment banking services.

Macquarie Asset Management (MAM) and Commodities and Global Markets (CGM) are by far the most profitable ventures for Macquarie, each generating over $2 Billion in profits over the FY21.

Should I Buy Macquarie Bank Shares: Dividend History

MQG shares typically announce a dividend with the release of its half-yearly results in November and full-year results in May as seen in their financial calendar. Dividends are typically paid twice a year, in July (Final Dividend) and December (Interim Dividend).

Should I Buy Macquarie Bank Shares, MQG Share Price, MQG Dividend history

MQG shares have paid a dividend every year since 1996. This includes the 2008 GFC and COVID recession. MQG shares pay dividends that are usually partially franked, averaging 40% the previous few years. The current average yearly dividend for MQG shares is $4.70 giving them a solid net yield of 3.07% or a gross yield of 3.59% at the current share price.

Investor Sentiment

After surveying 113 Investors about their current MQG shares sentiment: BUY-HOLD-SELL, as well as their target price over the next 12-months here are the results;

Should I Buy Macquarie Bank Shares, MQG Share Price

The results from this survey show there is currently a strong Bullish investor sentiment on MQG shares. So how much are MQG shares worth? Let’s get into it.

Should I Buy Macquarie Bank Shares: Fundamentals

Market Cap$57,333,550,928
Shares Issued368,728,220
ASX Rank9
PE18.45
EPS$8.429
Volume 4W Avg594,838
VWAP$154.84
PEG3.2x
NTA per Share$53.91
ROE13.5%
Debt$102.341 Billion
Equity$22.351 Billion
Should I Buy Macquarie Bank Shares: Fundamentals

Based on current fundamentals MQG seems reasonably valued within its sector and the broader market. Their current PE ratio of 18.45x is within the bounds of the 15-20x market average. Their ROE has been decent at 13.5%. We can also see that MQG has an NTA per share of $53.91. This represents 35% of their current valuation being backed by tangible assets.

Fundamental Comparison

Should I Buy Macquarie Bank Shares, MQG Share Price

Should I Buy Macquarie Bank Shares: Financials

In May MQG released its Full Year FY21 report. The group lists the following highlights:

  • FY21 net profit of $A3,015 million, up 10% on FY20; 2H21 net profit of $A2,030 million, up 106% on 1H21, up 59% on 2H20
  • International income representing 68% of total income
  • AUM of $A563.5 billion, down 6%
  • Financial position comfortably exceeds regulatory minimum requirements
    • Group capital surplus of $A8.8 billion
    • Bank CET1 Level 2 ratio 12.6% (Harmonised: 16.2%)
  • Annualised return on equity of 14.3%, compared with 14.5% in FY20

Macquarie Group’s profit of $3 Billion, represents their largest profit to date.

Should I Buy Macquarie Bank Shares, MQG Share Price

Income Statement

We can see from the financial year 2020 Net operating income has increased slightly to $12.774 Billion. Overall profits were $3.015 Billion which has increased over 10%. MQG has also managed to slightly reduce expenses by $4 Million.

Should I Buy Macquarie Bank Shares, MQG Share Price, MQG Income statement

Balance Sheet

We can see that Macquarie Group has managed to not only maintain but grow its strong balance sheet. We can see their Cash on hand has increased dramatically to over $18 Billion, we can see their total assets are down slightly. As such it looks like several assets have been liquidated namely derivatives. Overall Net Assets finished up the year at $22.3 Billion.

Should I Buy Macquarie Bank Shares, MQG Share Price, MQG Balance Sheet

Cash Flow Statement

Over the year the group paid out $861 Million in dividends. No capital was raised through the sale of MQG shares.

Should I Buy Macquarie Bank Shares, MQG Share Price, MQG Cash Flow statement

Should I Buy Macquarie Bank Shares: Technicals

The general consensus within the Technical Analysis community is currently Bullish on MQG shares. The moving averages and Technical Indicators seem to indicate a Strong Buy.

In summary, the short-term upside is likely to prevail as long as $150.2 is supported. The alternative scenario is that a downside breakout of $150.2 would call for $146.2 and $143.9.

Here’s A Breakdown Of The Detailed Technical Factors;

NameValueAction
RSI57.977Buy
STOCH69.411Buy
STOCHRSI100.000Overbought
MACD-0.074Sell
ADX35.886Buy
Williams %R-16.544Overbought
CCI143.5928Buy
ATR0.6971High Volatility
Highs/Lows0.7214Buy
Ultimate Oscillator63.851Buy
ROC0.303Buy
Bull/Bear Power1.4620Buy
Should I Buy Macquarie Bank Shares Source: https://au.investing.com/equities/macquarie-group-technical

Insider Ownership and Trading

We can see that once again MQG is largely owned by the general public and institutions with ownership over 51%, and 30.5% of the business respectively. Private companies own 17.5% of the business, and Individual Insiders only own 1% of the business. When compared to other blue-chip Australian companies this ownership breakdown is very common.

Should I Buy Macquarie Bank Shares, MQG Share Price, MQG Ownership

Insider Trading:

In 2021 to date there have been a number of tradings by insiders and institutions. The trade that stands out here is the purchase of over $7 Million worth of shares by Shemara Wikramanayake, the managing director and CEO of MQG. Insider purchasing is a positive sign and shows their belief in the future of the company adding value to shareholders.

DateActionValueNameEntitySharesMax Price
24 Jun 21Buy$804,046,161The Vanguard Group, Inc.Company4,979,539AU$161.47
19 Jun 21Sell$378,707,431The Vanguard Group, Inc.Company2,316,328AU$163.49
21 May 21Buy$7,090,982Shemara WikramanayakeIndividual47,088AU$150.59
19 May 21Sell$51,543,445UBS Asset ManagementCompany342,197AU$151.82
19 May 21Buy$50,204,643UBS Asset ManagementCompany331,727AU$154.92
17 May 21Sell$1,520,816,114UBS Asset ManagementCompany10,280,732AU$148.55
17 May 21Buy$1,640,171,387UBS Asset ManagementCompany11,090,535AU$150.80
10 May 21Buy$158Rebecca McGrathIndividual675AU$0.23
Should I Buy Macquarie Bank Shares: Insider Trading

Shareholder Distributions:

Holding Size1-10001001-5,0005,001-10,00010,001-100,000100,001+Total
No. of Shareholders173,75520,0281,32362259195,787

Management: Managing Director and CEO, Shemara Wikramanayake

Shemara has been Macquarie Group’s Managing Director and CEO since 2018.

Shemara joined Macquarie in 1987 in Macquarie Capital in Sydney. She has been responsible for establishing and leading Macquarie’s corporate advisory offices in New Zealand, Hong Kong, and Malaysia, and the infrastructure funds management business in the US and Canada.

She was Head of Macquarie Asset Management for 10 years before her appointment as CEO. Macquarie Asset Management grew to become a world-leading manager of infrastructure and real assets and a top 50 global public securities manager, under her management.

Current Broker Views

Citi: Sell, Target Price: $140

Macquarie’s acquisition of AMP Capital’s global equities and fixed income business (GEFI) adds a further $60bn of funds under management (FUM), lifting Macquarie Asset Management’s (MAM) total FUM to $720bn.

Citi expects no earnings contribution in FY22 with a minor benefit in FY23/24.

Forecast:

  • Citi forecasts a full year FY22 dividend of 520.00 cents and EPS of 797.40 cents.
  • Citi forecasts a full year FY23 dividend of 540.00 cents and EPS of 808.60 cents.

Morgan Stanley: Overweight, Target Price: $175

The acquisition of GEFI will add further diversity, scale, and relationships in the A&NZ market.

Forecast:

  • Morgan Stanley forecasts a full year FY22 dividend of 550.00 cents and EPS of 845.00 cents.
  • Morgan Stanley forecasts a full year FY23 dividend of 605.00 cents and EPS of 908.00 cents.

Morgans: Add, Target Price: $171

MQG’s full-year profit beat Morgans estimates. Morgans are expecting a flattish result for FY22, with positive results from the Macquarie Capital (MC) and bank. 

Forecast:

  • Morgans forecasts a full year FY22 dividend of 526.00 cents and EPS of 832.40 cents.
  • Morgans forecasts a full year FY23 dividend of 590.00 cents and EPS of 918.00 cents.

Future Prospects

Macquarie Group Identifies a range of factors that will influence their short turn prospects. These are standardized across the current banking sector and economic climate, and are concerns that have been echoed by a magnitude of companies.

  • The duration of COVID-19, speed of the global economic recovery and extent of government support for economies
  • Market conditions including significant volatility events and the impact of geopolitical events
  • Potential tax or regulatory changes and tax uncertainties
  • Completion of period-end reviews and the completion rate of transactions
  • The geographic composition of income and the impact of foreign exchange

Macquarie remains well-positioned to deliver superior performance in the long-medium term. They have a strong, constantly growing balance sheet with massive Funds Under Management. Their expertise in major markets; strength in business and geographic diversity and ability to adapt their portfolio mix to changing market conditions have managed them to deliver strong results despite a very challenging economic environment. We see MQG well equipped to continue this trend going forwards.

Should I Buy Macquarie Bank Shares: Prophet’s Take

Macquarie Group has performed very strongly during the economic downturn. Their strong balance sheet has allowed them to act in this time and grow their portfolio by acquiring AMP Capital’s global equities and fixed income business (GEFI), this has added $60 Billion of funds under management (FUM).

Their ability to respond and grow profits to all-time highs has proven the long-term ability of MQG. We are bullish on MQG. But are currently exploring other opportunities.

Please Remember all Articles Published on Prophet Invest are Opinion Only

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