Back to top

Analyst Blog

Riding on a steady growth momentum, shares of Marsh & McLennan Cos. (MMC - Analyst Report) hit a new 52-week high of $50.85 on Jun 5. Notably, this insurance and brokerage service provider’s shares have risen 7.4% since the beginning of 2014.

Moreover, the stock price appreciated about 5% alone after the company reported its first-quarter 2014 results in the beginning of May. Marsh & McLennan also delivered positive earnings surprise in 2 of the last 4 quarters, with an average beat of 2.4%. The encouraging momentum of this Zacks Rank #3 (Hold) stock is fueled by improved core growth and a strong competitive position.

Yesterday’s closing price represents a robust one-year return of about 26.7% against a return of 18.4% clocked by the S&P 500 index. Average volume of shares traded over the last three months stands at approximately 2,085.7K.

Earnings Review

On May 2, Marsh & McLennan reported first-quarter operating earnings of 81 cents per share, which came in line with the Zacks Consensus Estimate. However, the figure was up about 11% from the year-ago quarter earnings.

The improved results were led by modest revenue growth across the company’s insurance and consulting businesses, which also drove the operating margins. These were, however, partially offset by higher operating, commissions and tax expense.

Rationale

Since the beginning of 2014, Marsh & McLennan has broadened its diversified portfolio by acquiring about 8 firms across the U.S. Despite cash outflows for acquisitions and restructuring, the company boasts of an improved leverage. Moreover, the expansion in share buyback dividend hike and confidence of the ratings agencies restore optimism in the stock.

Currently, Marsh & McLennan carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the peer group include Aon Plc (AON - Analyst Report), Blue Capital Reinsurance Holdings Ltd. (BCRH - Snapshot Report) and Erie Indemnity Co. (ERIE - Snapshot Report), all of which have a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.