MQG share price in focus
Macquarie Group is a multinational investment bank and financial services company that was founded in 1969.
Macquarie’s operations are a bit different to the rest of the big Australian banks. While it does have a normal banking division, it is also an asset management company with investment operations spanning infrastructure, commodities, agriculture, real estate, and global equity markets.
Macquarie prides itself on delivering consistent value to shareholders, with a more than 55-year record of unbroken profitability.
JBH shares
Established in 1974, JB Hi-Fi is one of Australia’s largest retailers of electronic and home entertainment products.
The company is broadly split into three business segments, namely JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys, which sells a similar range of products and was acquired in 2016.
JB Hi-Fi operates through a cost-leadership strategy meaning it competes on price against its competitors. Many of its products are often discounted resulting in much better perceived value for its customers.
MQG & JBH share price valuation
One way to have a ‘fast read’ of where the MQG share price is could be to study something like dividend yield over time. This can give us a sense of the stability of the company and whether they can consistently pay out a percentage of profits.
Remember, the dividend yield is basically the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Macquarie Group Ltd shares have a dividend yield of around 2.63%, compared to its 5-year average of 3.16%. In other words, MQG shares are trading lower than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends have fallen, or that the share price is increasing, or both. In the case of MQG, we can see that last year’s dividend was less than the 3-year average, so the dividend has been falling.
Since JBH is more of a ‘growth’ company than an established blue chip, a price-sales ratio might be a more appropriate assessment. This ratio gives us an idea of how the company has historically been valued relative to its earnings, which can indicate if the company is over or undervalued today.
The JBH share price currently trades at a price-sales ratio of 0.81x, which compares to its 5-year long-term average of 0.70x. So, its shares are trading above their historical average.
Don’t forget, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s a good idea to use multiple valuation methods to value a share like JB Hi-Fi Ltd.
