Sometimes included as the fifth member of Australia's 'Big Four' banking group, Macquarie Group Ltd (ASX: MQG) is a compelling investment proposition.
After all, it derives ~70% of its earnings overseas (great in an era of a weak Australian dollar), has an outstanding record of entrepreneurial investment activity, and pays reliable dividends in addition to having a solid capital structure.
However, I do not believe that the banking group is a sound buy right now.
Even though shares are down 7% from their recent high of $84, Macquarie has indicated that it expects its profits to remain flat in 2016, while the tax rate will fall slightly leading to a minor overall improvement on 2015's results.
There's no growth, and while the uncertainty in global financial markets – particularly China and the Eurozone – are likely to increase the opportunities for Macquarie over the medium term, I do not believe it is worth paying a premium for flat earnings.
Even with the recent pullbacks I feel a price of $78 is too expensive for this company right now, and I would be looking for prices in the $60s before making an entrance.
It's not that Macquarie Group is a bad investment – far from it – it's just that there are better places to invest your money right now.
