Welcome to this ASX World Cup group game between the flash Macquarie Group Ltd (ASX: MQG) and workhorse Brambles Limited (ASX: BXB). Two different teams, but which has the stronger outlook?
Pre-match commentary and stats
The silver donut and its team of superstar bankers need to perform highly to justify their fat pay packets, but they impressed in the qualifying rounds after recently minting a full-year profit up 49% to more than $1 billion.
Pallets and plastic crates manufacturer Brambles is a dangerous opponent though, and is expecting its own profit to be not far short of the magic $1 billion mark in this financial year, it looks like we've got a close contest ahead.
| Macquarie Group | Brambles | |
| Code | ASX:MQG | ASX:BXB |
| Recent Price | $60.50 | $9.03 |
| Market Capitalisation | $19.4 billion | $14.1 billion |
| Dividend Yield / Franking | 4.6% | 100% | 3.0% | 30% |
| Projected P/E ratio 2015 | 14.5 | 18.6 |
| Price-Book ratio | 1.70 | 4.31 |
Source: Thomson Consensus Estimates
The first half starts and the hard working Macquarie team immediately takes the initiative with its lower projected price-earnings ratio and willingness to try innovative formations in the search for goals. Brambles has traditionally traded at a premium to the market and given Macquarie's strong growth momentum it scores the first goal. Macquarie's hard working players seem reluctant to take a break for half time, but the referee has talked them round and that's the interval.
Half-time score is 1-0 to Mac Bank.
Going into the second half it seems both businesses have significant operations in West European and North American markets, and this is a strength for investors looking to get exposure outside Australia. In fact Macquarie with 68% of income coming from outside Australia remains a unique proposition for ASX investors looking to own a financial stock with exposure weighted away from the Australian economy. Brambles' revenue streams are less reliant on the health of financial markets though and that defensive quality sees it spring a surprise to level the scores at 1-1.
The market evidently prefers Brambles defensive qualities to the mercurial talents of Macquarie, and neither side can find a winner up until full time. Macquarie remains the higher-risk, higher-reward play, while Brambles offers less thrills but more reliability. If you're looking for a business to beat these two, then we've found one with…
