Marsh & McLennan Companies, Inc. MMC is well-poised for growth on the back of sustained revenue increase, new business growth, frequent buyouts and adequate cash-generating abilities.

MMC’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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MMC’s Robust Growth Prospects

The Zacks Consensus Estimate for Marsh & McLennan’s 2024 earnings is pegged at $8.68 per share, indicating a 8.6% increase from the 2023 figure. The estimate for revenues is $24.3 billion, implying 6.8% growth from the prior-year number. 

The consensus estimate for 2025 earnings is pegged at $9.39 per share, indicating 8.1% growth from the 2024 estimate. The estimate for revenues is $26.5 billion, which indicates a rise of 9.3% from the 2024 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 2.67%.

MMC’s Solid Return on Equity

The return on equity for Marsh & McLennan is currently 32.7%, which is higher than the industry’s average of 31%. The figure substantiates the company’s efficiency in utilizing shareholders’ funds.

MMC’s Business Tailwinds

Marsh & McLennan continues to experience revenue growth, supported by strong performance in its Risk and Insurance Services and Consulting segments. The company has witnessed consistent revenue increase since 2010, except 2015. Management anticipates achieving mid-single-digit or higher underlying revenue growth in 2024.

The Risk and Insurance Services segment, contributing approximately 64% to MMC’s total revenues in the first nine months of 2024, is driven by new business growth, higher renewal rates and improved insurance and reinsurance pricing. The segment completed eight acquisitions in the same time frame, including buyouts such as Horton Group, AmeriStar Agency, Querbes & Nelson and Louisiana Companies. 

The Consulting segment, which accounted for roughly 36% of the company’s revenues in the first nine months of 2024, benefits from sustained demand for solutions in health, wealth and career services. In line with this demand, the unit completed five acquisitions in the same time frame.

Marsh & McLennan pursues an active inorganic growth strategy, frequently acquiring businesses across its operating segments. This approach allows the company to expand into new regions, strengthen its presence in existing markets and enhance its capabilities in specialized areas. In the first nine months of 2024, MMC spent $1 billion on acquisitions, up from $619 million in the prior-year comparable period. This November, Marsh & McLennan closed the buyout of McGriff Insurance Services, which is expected to enhance its capabilities, particularly in the middle-market segment. 

A sound financial foundation supports MMC’s acquisition-driven strategy and other growth initiatives. The company reported operating cash flows of $2.3 billion in the first nine months of 2024. This financial strength enables MMC to enhance shareholder value through dividend payments and share repurchases. The company has increased its dividend for 15 consecutive years, offering a dividend yield of 2.7%, higher than the industry average of 2.2%.

Stocks to Consider

Some better-ranked stocks in the insurance space are ProAssurance Corporation PRA, Brown & Brown, Inc. BRO and Radian Group Inc. RDN. While ProAssurance sports a Zacks Rank #1 (Strong Buy), Brown & Brown and Radian Group carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

ProAsssurance’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed the mark once, the average surprise being 61.46%. The Zacks Consensus Estimate for ERIE’s 2024 earnings is pegged at 76 cents per share. A loss of 14 cents per share was incurred in the prior year. 

The consensus mark for PRA’s earnings has moved 7% north in the past seven days. Shares of ProAssurance have gained 26.7% in the past year. 

Brown & Brown’s earnings surpassed estimates in each of the last four quarters, the average surprise being 6.87%. The Zacks Consensus Estimate for BRO’s 2024 earnings indicates an 33.1% rise, while the same for revenues implies an improvement of 11.2% from the respective prior-year figures. 

The consensus mark for BRO’s earnings has moved 0.3% north in the past 30 days. Shares of Brown & Brown have gained 49.8% in the past year.

Radian Group’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 17.65%. The Zacks Consensus Estimate for RDN’s 2024 earnings indicates a 3.1% rise, while the same for revenues implies an improvement of 6.4% from the respective prior-year figures. 

The consensus mark for RDN’s 2024 earnings has moved up 6.7% in the past 30 days. Shares of Radian Group have gained 36% in the past year.

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