Here's Why You Should Hold on to Marsh & McLennan Stock for Now
Marsh & McLennan Companies, Inc. MMC is aided by segmental strength, new business growth, an active acquisition strategy and sound cash reserves.
MMC Stock’s Zacks Rank & Price Rally
Marsh & McLennan currently carries a Zacks Rank #3 (Hold).
The stock has gained 18.1% in the past year.
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Robust Growth Prospects of MMC Stock
The Zacks Consensus Estimate for Marsh & McLennan’s 2024 earnings is pegged at $8.74 per share, indicating a 9.4% increase from the 2023 figure. The estimate for revenues is $24.3 billion, implying 6.7% growth from the prior-year number.
The consensus estimate for 2025 earnings is pegged at $9.45 per share, indicating 8.1% growth from the 2024 estimate. The same for revenues is $25.6 billion, which indicates a rise of 5.7% from the prior-year estimate.
MMC’s Robust Earnings Surprise History
MMC boasts an impressive surprise history. Its earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.80%.
Solid Return on Equity of MMC Stock
The return on equity for Marsh & McLennan is currently 33.9%, which is higher than the industry’s average of 32.4%. The figure substantiates the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds of MMC
Marsh & McLennan’s revenue growth continues to be driven by strong performance in both its Risk and Insurance Services and Consulting segments. The company has seen consistent revenue growth since 2010, with the exception of 2015. For 2024, management expects to achieve mid-single-digit or higher underlying revenue growth.
The Risk and Insurance Services segment is benefiting from new business growth, increased renewal rates and improved insurance and reinsurance pricing, alongside a growing global economy. In the first half of 2024, the segment completed five acquisitions, some of which are NOSCO Insurance Service Company, Querbes & Nelson and Louisiana Companies.
The Consulting segment continues to perform well, supported by strong demand for health, wealth and career consulting solutions. This segment also expanded through four acquisitions in the first half of 2024.
Marsh & McLennan maintains an active acquisition strategy, frequently making buyouts across its various business units to expand its geographical footprint, enter new markets and enhance its capabilities within existing operations. In the first half of 2024, the company spent $644 million on acquisitions. A recent buyout includes that of McGriff Insurance Services, a U.S.-based provider of insurance broking and risk management services. MMC is expected to benefit from improved capabilities across commercial property and casualty, employee benefits and personal lines as a result of the McGriff acquisition.
To support its acquisition strategy and growth initiatives, Marsh & McLennan relies on a strong financial foundation. The company has sound cash reserves and adequate cash-generating abilities. This financial strength also enables it to return capital to shareholders through dividends and share repurchases. Its current dividend yield of 1.5% is higher than the industry average of 1%.
Stocks to Consider
Some better-ranked stocks in the insurance space are Kemper Corporation KMPR, CNO Financial Group, Inc. CNO and Brighthouse Financial, Inc. BHF. Kemper sports a Zacks Rank #1 (Strong Buy), and CNO Financial and Brighthouse Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kemper’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters, matched the mark once and missed the same in the remaining one occassion, the average surprise being 6.93%. The consensus estimate for KMPR’s 2024 earnings is pegged at $5.17 per share. A loss of 74 cents per share was incurred in the prior-year quarter.
The consensus mark for KMPR’s earnings has moved 10.7% north in the past 60 days. Shares of Kemper have gained 45.7% in the past year.
CNO Financial’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 21.21%. The Zacks Consensus Estimate for CNO’s 2024 earnings indicates an 11% rise from the prior-year figure.
The consensus mark for CNO’s 2024 earnings has moved 6.9% north in the past 60 days. Shares of CNO Financial have gained 47.1% in the past year.
Brighthouse Financial’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.76%. The Zacks Consensus Estimate for BHF’s 2024 earnings indicates a 29.8% rise while the estimate for revenues implies an improvement of 3.8% from the respective prior-year figures.
The consensus mark for BHF’s 2024 earnings has moved up 14.4% in the past 60 days. Shares of Brighthouse Financial have declined 8% in the past year.
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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
Kemper Corporation (KMPR) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report