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Why Is Marsh & McLennan (MMC) Down 2.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marsh & McLennan (MMC - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marsh & McLennan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marsh & McLennan’s Earnings Beat in Q2, Improve Y/Y
Marsh & McLennan delivered second-quarter 2020 adjusted earnings per share of $1.32, surpassing the Zacks Consensus Estimate by 15.8% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line increased 11.9% year over year.
Marsh & McLennan’s consolidated revenues of $4.2 billion dipped 2% on an underlying basis. However, the top line beat the Zacks Consensus Estimate by 0.5% on the back of its strong Risk and Insurance Services segment.
Total operating expenses of $3.3 billion in the second quarter were down 10% year over year owing to lower compensation and benefits as well as other operating expenses.
Quarterly Segmental Results
Risk and Insurance Services
Revenues at the Risk and Insurance Services segment were $2.6 billion, up 2% on an underlying basis. Adjusted operating income rose 19% to $762 million from the prior-year quarter’s level.
Marsh, a unit within this segment, generated revenues of $2.2 billion, up 1% on an underlying basis. In U.S./Canada, underlying revenues rose 3% year over year.
Underlying revenue growth from international operations was flat year over year, which includes 4% increase of the underlying metric in the Asia Pacific, a 4% rise in Latin America and a 3% drop in EMEA.
Another unit under this segment, Guy Carpenter, displayed 9% revenue growth on an underlying basis in the quarter under review.
Consulting
The Consulting segment's revenues were down 6% on an underlying basis to $1.6 billion. Also, adjusted operating income fell 13% to $265 million.
A unit within this segment, Mercer, generated revenues of $1.1 billion, down 3% on an underlying basis. Wealth’s revenues were down 2% on an underlying basis. Health and Career’s revenues were up 1% and down 16% year over year on an underlying basis.
Another unit Oliver Wyman Group registered revenues of $467 million, down 13% year over year on an underlying basis.
Business Update
The company issued $750 million of 10-year senior unsecured notes in the second quarter.
Dividend Update
The company hiked its quarterly dividend to 46.5 cents per share, effective with the third-quarter dividend, payable Aug 14, 2020.
Financial Update
Marsh & McLennan exited the second quarter with cash and cash equivalents of $1.7 billion, up 48.1% from the level at 2019 end.
Net cash provided by operating activities totaled $578 million, up 139.8% year over year.
As of Jun 30, 2020, Marsh & McLennan’s total assets were $32.2 billion, up 2.6% from the figure as of Dec 31, 2019.
Total equity was $8.3 billion, up 5.7% from the level at 2019 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Marsh & McLennan has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marsh & McLennan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Marsh & McLennan (MMC) Down 2.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Marsh & McLennan (MMC - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marsh & McLennan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marsh & McLennan’s Earnings Beat in Q2, Improve Y/Y
Marsh & McLennan delivered second-quarter 2020 adjusted earnings per share of $1.32, surpassing the Zacks Consensus Estimate by 15.8% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line increased 11.9% year over year.
Marsh & McLennan’s consolidated revenues of $4.2 billion dipped 2% on an underlying basis. However, the top line beat the Zacks Consensus Estimate by 0.5% on the back of its strong Risk and Insurance Services segment.
Total operating expenses of $3.3 billion in the second quarter were down 10% year over year owing to lower compensation and benefits as well as other operating expenses.
Quarterly Segmental Results
Risk and Insurance Services
Revenues at the Risk and Insurance Services segment were $2.6 billion, up 2% on an underlying basis. Adjusted operating income rose 19% to $762 million from the prior-year quarter’s level.
Marsh, a unit within this segment, generated revenues of $2.2 billion, up 1% on an underlying basis. In U.S./Canada, underlying revenues rose 3% year over year.
Underlying revenue growth from international operations was flat year over year, which includes 4% increase of the underlying metric in the Asia Pacific, a 4% rise in Latin America and a 3% drop in EMEA.
Another unit under this segment, Guy Carpenter, displayed 9% revenue growth on an underlying basis in the quarter under review.
Consulting
The Consulting segment's revenues were down 6% on an underlying basis to $1.6 billion. Also, adjusted operating income fell 13% to $265 million.
A unit within this segment, Mercer, generated revenues of $1.1 billion, down 3% on an underlying basis. Wealth’s revenues were down 2% on an underlying basis. Health and Career’s revenues were up 1% and down 16% year over year on an underlying basis.
Another unit Oliver Wyman Group registered revenues of $467 million, down 13% year over year on an underlying basis.
Business Update
The company issued $750 million of 10-year senior unsecured notes in the second quarter.
Dividend Update
The company hiked its quarterly dividend to 46.5 cents per share, effective with the third-quarter dividend, payable Aug 14, 2020.
Financial Update
Marsh & McLennan exited the second quarter with cash and cash equivalents of $1.7 billion, up 48.1% from the level at 2019 end.
Net cash provided by operating activities totaled $578 million, up 139.8% year over year.
As of Jun 30, 2020, Marsh & McLennan’s total assets were $32.2 billion, up 2.6% from the figure as of Dec 31, 2019.
Total equity was $8.3 billion, up 5.7% from the level at 2019 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Marsh & McLennan has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marsh & McLennan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.