Executive Summary
•Macquarie trades at ~18.3x NTM P/E on revised consensus EPS of $13.74, a 35% premium to its own 2 year average P/BV (2.7x vs 2.0x) yet a discount to global alternative managers (BX 24.7x, KKR 28.0x, BAM 26.0x TTM)
•CGM is the earnings swing factor: gas, power and energy trading plus asset monetisation have driven the record contribution, and normalisation of commodity volatility is the single largest threat to the earnings base
•MAM fee based AUM and performance fee realisation supply the annuity style ballast, with capital surplus underpinning buyback capacity and a mid teens ROE ambition
•Consensus target $262.57 implies only ~4% upside from $251.90, so risk/reward is balanced and a re rating needs a CGM beat or a step up in MAM performance fees
Financial Snapshot
•Revenue (TTM): $17.79b
•TTM EPS: ~$11.6 (implied by 21.66x TTM P/E)
•NTM EPS: $13.74 (revised up from a stale $11.69)
•Net margin: 21.1%
•Operating margin: 28.4%
•ROE: 11.2% (TTM)
•Dividend yield: 2.87%
•Market cap: ~$170.5b
•Net debt / EV: 0.65x
•52 week range: $187.31 to $267.90
•Quarterly revenue series ($16.9b to $19.5b) is inconsistent with the $17.79b TTM figure and appears to be on a different basis, so treat the quarterly prints as unreliable
Forward Outlook
•Revenue guidance: Not disclosed; consensus revenue feed is corrupted
•EPS estimates: consensus NTM EPS $13.74, implying ~18% growth off a ~$11.6 trailing base, revised up from $11.69
•Margin trajectory: operating margin 28.4% and net margin 21.1%, with mix shift toward fee based MAM income supporting resilience
•Consensus target price $262.57, ~4% above the $251.90 spot
•Dividend yield 2.87% with a DRP in operation and a $734m employee share purchase completed at a $238.80 weighted average
•CGM contribution to remain the largest swing factor, with gas and energy trading the key variable
•MAM fee based AUM growth and performance fee realisation to drive annuity style income
•ROE trajectory: reported 11.2% TTM sits below the group historical mid teens range; forward ROE Not disclosed (feed error)
•Capital surplus supports ongoing buyback capacity, though no quantum has been disclosed
Valuation Analysis
•NTM P/E: ~18.3x (on $13.74 consensus EPS)
•NTM P/E (stale): 21.6x (on $11.69)
•TTM P/E: 21.66x
•NTM EV/EBIT: ~24.2x
•NTM EV/EBITDA: ~21.2x
•NTM P/S: Not disclosed (consensus revenue feed is corrupted)
•P/BV: 2.7x vs 2 year average 2.0x (+35%, +1.5 SD)
•EV/Revenue: 8.5x vs 2 year average 6.1x (+40%)
•EV/EBITDA: 21.2x vs 2 year average 12.9x (+64%)
•DCF cross check: at WACC 9 to 10% and terminal growth 2 to 3%, a normalised ~$13.5 to $14.0 earnings base supports fair value in the $250 to $270 range
•Consensus target: $262.57
•EQRV implied price at 2 year average P/BV: $186.33
•EQRV implied price at 2 year average EV/Revenue: $123.19
•BX: ~24.7x TTM P/E, $131.5b market cap, alternative asset management
•KKR: ~28.0x TTM P/E, $80.5b market cap, private markets and insurance
•BAM: ~26.0x TTM P/E, $72.2b market cap, pure play asset management
•MQG: ~21.7x TTM P/E, ~$170.5b market cap, diversified financials with banking and commodities
Key Risks & Catalysts
Risks
•CGM earnings normalisation if gas and energy trading volatility subsides
•Performance fee realisation is lumpy and timing dependent
•Commodity price and FX volatility feeding directly into CGM
•Regulatory and capital requirement changes across APRA and offshore regimes
•Green energy asset impairments or delayed divestments
•Elevated valuation versus own history limits re rating potential
•Guidance reliability risk if the market facing share of income rises
Catalysts
•Strong CGM result on energy trading
•MAM performance fee crystallisation from infrastructure funds
•Green energy and infrastructure asset divestment gains
•Buyback announcement funded from capital surplus
•Consensus EPS upgrades (already revised to $13.74)
•Continued DRP and capital management actions
Investment Thesis
Macquarie is a diversified global financial group where the earnings engine is CGM, and specifically gas, power and energy trading plus asset monetisation. That business has driven the record profit base but is inherently market facing and volatile. MAM provides the annuity style counterweight through fee based AUM and performance fees, and the mix between the two determines how reliable guidance proves to be. On current disclosure the market facing share remains high enough that a normalisation in commodity volatility would bite.
Valuation is the constraint. At ~18.3x NTM P/E on $13.74 consensus EPS the stock is not expensive against global peers (BX 24.7x, KKR 28.0x, BAM 26.0x), but it sits at a clear premium to its own 2 year history on P/BV (2.7x vs 2.0x) and EV/Revenue (8.5x vs 6.1x). Consensus target of $262.57 offers only ~4% upside, and the EQRV implied price at average P/BV of $186.33 flags how much optimism is already embedded. The EPS upgrade cycle is the bull case; the multiple is the bear case.
We rate MQG Neutral with a fair value of ~$260, roughly in line with consensus. The stock needs either a CGM beat on energy trading, a step up in MAM performance fees, or a capital surplus buyback to justify a re rating from here. Absent one of those, the risk/reward is balanced and the shares look fully valued.
