The Macquarie Group Ltd (ASX: MQG) share price fell 3% today, is it now a buy?
Macquarie is Australia's largest investment banks and one of the largest companies in Australia.
Unlike Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), Macquarie does not derive most of its earnings from Australia or from mortgages. Macquarie only has 2% of the Australian mortgage market, representing a 'tiny' $36.1 billion.
Macquarie has a global earnings profile. Based on its recently-announced half-year result, around two thirds of total income was generated outside of Australia. Around 31% came from the Americas, 27% from EMEA (Europe, the Middle East and Africa) and 9% from Asia.
The diversification of earnings alone makes Macquarie somewhat safer than the big four ASX banks because it doesn't have all of its income eggs in one basket. It has multiple levers that it can pull. Plus, it can expand in whatever region it thinks is best.
I also like that Macquarie has made a reputation for itself as the world-leading infrastructure manager based on assets under management (AUM). This provides a reliable source of management fees and gives plenty of scope for future growth with how much western and Asian countries are investing into infrastructure.
One of Macquarie's biggest areas of equity investment is in green energy. I like that Macquarie is looking at which way trends are headed. Macquarie had around $1.2 billion invested in green energy across more than 25 investments at September 2018.
Is Macquarie Group a buy?
If I could only pick one financial business from the ASX 20 it would definitely be Macquarie. It would take another GFC-type event to seriously damage Macquarie. Its earnings are safer and more consistent than it used to be before the GFC.
It's currently trading at around 13x FY19's estimated earnings with a partially franked dividend yield of 4.7%. I'd prefer to buy Macquarie compared to most other ASX 20 shares, although I am personally waiting for the next recession before perhaps buying – I think there are better priced opportunities at the moment.
