In this match-up, the two companies have connections to the financial markets. When the ASX rises and international equities are hitting new highs, both can make great gains and share prices head upwards. Which has the right stuff to make it past the first round?
|
Macquarie Group |
Computershare |
|
| Market Capitalisation |
$19.2 billion |
$6.9 billion |
| Share Price |
$59.84 |
$12.40 |
| Dividend Yield |
4.60% |
2.40% |
| PE ratio |
15.9 |
19.2 |
| Return on Equity |
11.10% |
12% |
| Past Earnings Track Record (compound annual growth rate) |
5-year: 3.8% 1-year: 55.7% |
5-year: 2% 1-year: 42.8% |
Source: Morningstar
— Financial market revival
The investment bank Macquarie Group Ltd (ASX: MQG) has made great headway in the past two years with a share price gain from about $25 in mid-2012 to almost $60 now. Both the ASX and international stockmarkets have risen, which greatly benefits its earnings.
Corporate activities such as capital raisings, IPOs (initial public offerings) and mergers & acquisitions have increased due to better business opportunities and investments available. Macquarie Group thrives on these kinds of services. Its FY2014 full year net profit jumped about 48% up to $1.26 billion.
Computershare Limited (ASX: CPU), the share registry and transaction agency service provider, likewise does more business as financial markets and share trading rises. From mid-2012, its stock rose from about $8 to $12.40, or about 55%.
Its half-year underlying net profit was up 9.6% to $163 million. The company is expecting a 5% – 10% gain in underlying earnings per share for the FY 2014 full year.
This would give Macquarie Group the first goal from earnings and share price increases.
— Business expansion and earnings outlook
Computershare is growing its business overseas in large financial market regions like the US and UK, making three acquisitions since 2013 for employee and investor service companies. Some analyst projections are for earnings to grow an average 11% annually over the next two years.
For Macquarie Group, growing its Australian residential home loan volumes is one of their top goals. It is increasing its market share versus the Big Four banks and teaming up with other financial service and mortgage broking companies to reach more borrowers as the housing market rises.
Analysts' earnings projections are for about a 10% average annual gain for the next two years.
Just by a close shot, Computershare sneaks by a quick goal, equalising for one-all.
Full time
At the last whistle, we have a 1-1 tie. Both companies have good outlooks, dependent on sustained growth of the financial markets and low interest rate environment. They still have a chance to win against other stocks in the upcoming group play.
