Macquarie Group – Algo Buy Signal

Macquarie Group has sold off from $137 down to $114, following a software outlook for next year’s earnings.

Although it is unlikely they’ll deliver 17% EPS growth, it is probable that we’ll see growth within the 5 – 8% range, which will continue to ensure Macquarie Group’s shares remain attractive.

We have the stock trading on a 5% yield into FY20.

Text from a post last month…. Allowing for continued short-term selling in global markets, we suggest investors add MQG to their watch lists and look for the short term momentum indicators to reverse high within the $116 – $120 range. 

We’re now at the point described above. MQG is trading at $114 and looks like buying interest will build near the current price level.

Macquarie Group – FY19 Earnings

Macquarie Group reported FY19 earnings today and group revenue was up 19% to $6.25bn and NPAT was up 17% $2.99bn.

MQG is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

We forecast FY20 earnings to increase by 6%, placing the stock on a  forward yield of 4.8%.

 

 

Macquarie Upgrades Earnings

Macquarie Group is a current holding in the ASX100 model portfolio.

Macquarie upgraded their earnings guidance for FY19 profit to be up 15% from a previous estimate of 10%.

Now that the ACCC has given the green light for Santos to acquire Quadrant Energy, MQG stands to collect about $500 million for their 22% stake in Quadrant.

Macquarie Group

 

Higher Funding Costs To Weigh On “Big 5” Bank Shares

Local banking stocks will be facing higher funding costs as LIBOR rates have surged higher over the last few weeks.

Considering the negative combination of the Royal Commission and lower margins on Mortgage lending, we have been urging caution to investors looking to buy the recent dips in the Big 5  banking names.

As illustrated in the chart below, the cost of local bank funding has posted the sharpest monthly rise in over 8 years.

As such, we don’t believe the local bank shares have found sustainable price support levels yet.

Phone in for more details on trading the local banking stocks on a cash basis and on the SAXO Go CFD platform

LIBOR

 

 

MQG Sprints Higher On H1 Results

Shares of Macquarie Group posted an all-time high at $98.28 in early trade on a solid half-yearly result and the announcement of a $1 billion share buyback scheme.

The bank’s net profit for the six months to September 30th was up 19% at $1.25 billion, while net operating income was up 3.4% to $5.4 billion.

A key driver of the report was a 17% rise in fees and commission income from their US debt capital markets business.

It’s expected that the bank’s full-year results will be inline with last year’s $2.2 billion result, which means second-half could be slightly lower.

The interim dividend was lifted by 15 cents to $2.05 per share, 45% franked.

From a technical perspective, the sharply higher open has left a $2.00 gap from yesterday’s high of $94.39 to today’s low at $96.53. Typically, price gaps are filled but we don’t expect that to happen during today’s session.

Macquarie Group

 

Major Banks Set To Report Earnings

The ANZ will announce its annual results on Thursday as the first of the major banks to report over the next three weeks. NAB will report next Thursday and WBC will report the following Thursday.

ANZ is expected to announce a full year cash profit of $6.89 billion and a DPS of 83 cents on revenue of $20.7 billion. Much of this gain is based on stronger owner-occupied home lending.

Analysts are expecting ANZ to be the first of the major banks to return capital to shareholders given its pro-forma position outlined by APRA last month.

At this point, the NAB’s profit forecast is expected to be $6.6 billion with a DPS of 99 cents.

MQG will report their half-yearly results this Friday. The numbers on the street are reflecting a profit of $1.1 billion with a DPS of $2.10 per share.

ANZ

NAB

 

Westpac

MQG

ALGO Sell Signal: Macquarie Group

During a thin, pre-holiday trading session on Friday, all the major banking names bounced off their intra-day lows.

Into the close of ASX trade, our ALGO engine triggered a sell signal in MQG at $90.90.

MQG peaked on May 8th at $96.30; the day before the government announced the banking levy. Subsequently, the shares dipped to $82.30 on September 8th.

With all the local banking names facing headwinds in core revenue growth going forward, we consider the rebound in MQG shares as corrective in nature.

As the chart below illustrates, a trade back to the June 20th high of $91.45 would signal a “double top” and likely be met with selling interest.

With internal momentum indicators showing an “overbought” condition, we see scope for MQG shares to retest the $83.00 level over the medium-term.

Macquarie Group

Algo Update – Macquarie Bank

Our Algo Engine triggered a buy signal in MQG near the recent low of $82.28.

During an outlook update provided to the market, MQG re-affirmed guidance for its FY18 result to be broadly in line with FY17.  Management noted that, strong revenues in the FUM business will help underpin FY18 earnings.

FY18 cash earnings of $2.3b, EPS $6.70 and DPS $4.70, represents 3 – 5% earnings growth on FY17 and places the stock on a forward yield of 5.4%.

There appears to be short-term upside price momentum from the recent signal, however, stop losses below the $82.28 low are advised.