Macquarie Group Shares The Most Expensive On The ASX, But Not By Most Measures

Macquarie Group’s share price at A$246.10 may sit at the top of the ASX price ladder, but that does not make it the most expensive by conventional valuation metrics. For investors trying to understand where genuine value lies among Australia’s blue-chip names, this is a huge point that warrants attention, and one which we have been asked more than once.

The MQG share price closed out September at A$246.10, a price point that has long attracted attention simply for costing the most to buy 1 share of the company. But that does not make it expensive, not once we revisit what expensive actually means. The share price itself is largely a function of how Macquarie has structured its capital base over time, maintaining a relatively tight share count that concentrates earnings into each unit rather than diluting them across a broader register.

There is a clear difference between expensive in the dictionary “costing a lot of money or having a high price”, and that which is used when we are talking about valuation “the analytical process of determining the current economic worth or fair market value of a business, asset, security, or liability”.

How Do Macquarie Shares Compare With CBA, or BHP

At the close of Q3, the stock holds a market cap of A$90.93 billion, a figure that, while substantial, sits well below domestic heavyweights Commonwealth Bank of Australia at A$252.71 billion and BHP Group at A$309.22 billion.

Strip away the sticker price of the stock, and what remains is a valuation picture that reads quite differently. On a trailing price-to-earnings basis, Macquarie trades at 19.43 times, a multiple that sits meaningfully below Commonwealth Bank’s 23.17 times and BHP’s 22.11 times. Moving to a forward earnings basis, and the comparison shifts slightly, with MQG trading at approximately 18.4 times expected earnings against CBA’s 22.5 times forward multiple, and BHP at 17.5x.

The contrast if we expand out to the ASX’s tech stocks is even more pronounced. Pro Medicus trades at approximately 64 times trailing earnings, Xero at around 62 times, and Codan at roughly 72 times. These are businesses where markets are paying a significant premium for anticipated future growth rather than current earnings power.

Macquarie, by comparison, is generating substantial profits today and being valued at a multiple more consistent with a mature, cash-generative financial institution than a speculative growth play.

There are mechanical ways that companies look to reduce share price, such as stock splits that increase the share count, and provide more individual units to each holder at a reduced price. This does nothing to change the fundamental value of the company, or the earnings ratio, but it does change the number we see on screens.

What Lay Ahead

Now we know MQG is not expensive by fundamental measures, let’s take a look at the setup from here heading into Q4.

With a forward multiple of 18.4 times, Macquarie Group represents a reasonable entry point relative to history and relative to peers, assuming earnings estimates hold. The consensus view among analysts who cover the stock is broadly constructive on the medium-term outlook, anchored by confidence in the structural growth of infrastructure investment globally and Macquarie’s established position in that market. The group’s ability to recycle capital efficiently, raise new funds, and deploy capital into high-returning assets remains central to the investment thesis.

The risk to that thesis is not so much a question of whether infrastructure investment will grow, but whether Macquarie can maintain the pace of asset realisation and performance fee generation that markets have come to expect in strong cycles.

Shares head into the final quarter up 20.8% YTD, yet momentum could be tested in the sessions ahead, with the price falling below the 30 day SMA as September drew to a close. A break above, and a subsequent move to the 50 day SMA at A$251.43 could see momentum shift back towards bulls, whilst a rejection here could see some of the earlier gains unwind.