News

Marsh & McLennan Companies, Inc. MMC is set to report its second-quarter 2024 results on Jul 18, before the opening bell.

The Zacks Consensus Estimate for second-quarter earnings per share (EPS) of $2.39 is indicative of an 8.6% increase from the year-ago quarter’s reported earnings of $2.20 per share. The estimate was revised upward, resulting in an increase of 1 cent from $2.38 per share. The consensus estimate for revenues is pegged at $6.3 billion, indicating a rise of 6.9% from the year-ago quarter’s reported figure.

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Marsh & McLennan’s earnings beat estimates in all the trailing four quarters, the average surprise being 6.5%.

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Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Marsh & McLennan this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

Earnings ESP: Marsh & McLennan has an Earnings ESP of -0.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marsh & McLennan currently has a Zacks Rank #3.

Q2 Factors to Note

Marsh & McLennan’s second-quarter revenues are expected to have benefited from robust performance in its Risk and Insurance Services and Consulting segments. The Risk and Insurance Services segment is expected to have consistently gained from solid contributions from its Marsh and Guy Carpenter sub-divisions.

Marsh & McLennan’sperformance is expected to have been driven by new business growth and a solid renewal environment. Strong growth in EMEA, Latin America, and Asia-Pacific is also anticipated to have contributed strongly to MMC’s second-quarter results.

The Zacks Consensus Estimate for revenues from the Risk and Insurance Services segment indicates a rise of 7.2% from the prior-year quarter’s level of $3.7 billion. Our estimate suggests a 6.8% jump. Also, the consensus mark for the segment’s adjusted operating income suggests an almost 7.2% increase from the prior-year quarter’s figure of $1.2 billion.

The Consulting segment of Marsh & McLennan is anticipated to have gained momentum in the second quarter, driven by the impressive performance of its sub-unit, Oliver Wyman. Oliver Wyman is likely to have been bolstered by several strategic acquisitions aimed at enhancing its capabilities and expanding its geographic presence. The Zacks Consensus Estimate for the Oliver Wyman business' revenues indicates 7.5% year-over-year growth.

Improving performance in its Wealth and Health operations is likely to have aided the Mercer (another sub-unit of the Consulting segment) business in the to-be-reported quarter. We expect positive net flows and improving assets under management to benefit the Wealth business. The Zacks Consensus Estimate for revenues of the Mercer sub-division indicates a 5.2% increase from the prior-year quarter’s level of $1.4 billion,

The Zacks Consensus Estimate for the overall Consulting segment’s revenues indicates growth of approximately 5.8% from the prior-year quarter’s $2.2 billion. Also, the consensus mark for the segment’s adjusted operating income is pegged at $468 million, indicating 20.6% growth from the year-ago quarter’s reported number.The above factors are expected to have positioned the company well for the second quarter of 2024.

However, higher expenses, decreasing rates in workers’ compensation, financial and professional liability, and declining cyber pricing are likely to have affected MMC’s second-quarter results. We expect total operating expenses to have increased 4.5% year over year in the second quarter of 2024. MMC’s high growth Consulting segment might have acted as a headwind, given its comparatively high macro sensitivity than P&C brokerage. Moreover, given that higher rates lead to a high cost of risk for insurers, MMC’s insurance brokerage business’s volumes might have experienced softness as a result, making an earnings beat uncertain.

Price Performance

Marsh & McLennan stock has exhibited an upward movement, gaining a notable percentage in the year-to-date period. The stock has rallied 15.7% compared with the industry’s rise of 13.8%. Additionally, the stock outperformed its sector, which increased 9.2% during the same period while it underperformed the S&P 500 index which rose 18.2%.

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Conclusion

Given the expected strong performances of MMC’s segments, strategic acquisitions, and rate increases, coupled with strong year-to-date performance, investors can retain Marsh & McLennan stock now. However, rising expenses and inflation make it important for investors to closely watch the upcoming earnings results.

Stocks to Consider

While an earnings beat looks uncertain for Marsh & McLennan, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Aflac Incorporated AFL has an Earnings ESP of +0.54% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Aflac’s bottom line for the to-be-reported quarter is pegged at $1.59 per share, indicating 0.6% year-over-year growth. The estimate grew 1 cent in the past 60 days. The consensus estimate for AFL’s revenues is pegged at $4.4 billion. AFL beat earnings estimates in three of the past four quarters and missed once, the average beat is 7.3%.

Aon plc AON has an Earnings ESP of +1.16% and a Zacks Rank of 3.

The Zacks Consensus Estimate for AON’s bottom line for the to-be-reported quarter is pegged at $3.09 per share, implying a 12% year-over-year increase. The estimate increased 3 cents over the past week. The consensus estimate for AON’s revenues is pegged at $3.7 billion.

Enact Holdings, Inc. ACT has an Earnings ESP of +3.88% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Enact Holdings' bottom line for the to-be-reported quarter is pegged at $1.03 per share. The consensus estimate for its revenues is pegged at $306.6 million, indicating a 10.5% increase from a year ago. ACT beat earnings estimates in each of the past four quarters, with an average of 16.7%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.