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Why Should You Hold Marsh & McLennan (MMC) in Your Portfolio?
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Marsh & McLennan Companies, Inc. (MMC - Free Report) has been in investors' good books on the back of its strategic initiatives, which led to its business expansion.
It retained investors' favorable sentiments by maintaining its beat streak in all the last four quarters, the average being 8.2%. This, in turn, underlines its operational excellence.
The company recently delivered third-quarter 2020 adjusted earnings per share of 82 cents, surpassing the Zacks Consensus Estimate by 19% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line improved 6.5% year over year. In fact, it anticipates an overall margin expansion for 2020, which will mark its 13th consecutive year of reported margin growth.
Its operating performance has been encouraging over the past many years, attributable to its diverse product offerings, a wide geographic footprint and strong client retention. Its revenues have been increasing consistently since 2010 (except in 2015, which saw a revenue dip by just 0.4%). The year 2019 even marked the highest annual revenue growth rate for the company in 20 years, which is pretty impressive. In the first nine months of 2020, the company’s revenues of $12.8 billion were up 3% (1% on an underlying basis) owing to a strong Risk and Insurances Services Segment.
Acquisitions form one of the core growth strategies at Marsh and McLennan. The company made numerous purchases within its different operating units that enabled it to enter new geographical regions, expand within those that are currently running, foray into new businesses, develop new segments and specialize within its existing businesses. The company’s last-year acquisition of JLT expanded its capabilities going forward. The Risk and Insurance Services segment completed two acquisitions in the first quarter of 2020. It continued to build MMA through buyouts.
The company has maintained consistent cash flow generation for the past many years. In July 2020, its board of directors hiked 2.2% of its quarterly cash dividend, reflecting the 11th consecutive year of dividend increase. Marsh & McLennan’s current dividend yield of 1.6% is higher than the industry average of 1.4%. Although it doesn’t expect to buy back shares for 2020, we remain hopeful that the same will be resumed once the pandemic effect ends.
Moreover, the company’s 31.2% ROE betters its industry average of 27.4%, reflecting its efficiency in utilizing its shareholders’ funds.
However, the company’s operating expenses escalated over the last several years due to higher compensation and benefits. A persistent elevation of expenses might weigh on the company’s margins.
For 2020, its earnings estimate stands at $4.92, indicating an upside of 5.6% from the year-ago reported figure.
The company’s peers, namely Arthur J. Gallagher & Co. (AJG - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Aon plc (AON - Free Report) have also rallied 26.2%, 24.4% and 3.2%, respectively, in the same time frame
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
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Why Should You Hold Marsh & McLennan (MMC) in Your Portfolio?
Marsh & McLennan Companies, Inc. (MMC - Free Report) has been in investors' good books on the back of its strategic initiatives, which led to its business expansion.
It retained investors' favorable sentiments by maintaining its beat streak in all the last four quarters, the average being 8.2%. This, in turn, underlines its operational excellence.
The company recently delivered third-quarter 2020 adjusted earnings per share of 82 cents, surpassing the Zacks Consensus Estimate by 19% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line improved 6.5% year over year.
In fact, it anticipates an overall margin expansion for 2020, which will mark its 13th consecutive year of reported margin growth.
Its operating performance has been encouraging over the past many years, attributable to its diverse product offerings, a wide geographic footprint and strong client retention. Its revenues have been increasing consistently since 2010 (except in 2015, which saw a revenue dip by just 0.4%). The year 2019 even marked the highest annual revenue growth rate for the company in 20 years, which is pretty impressive. In the first nine months of 2020, the company’s revenues of $12.8 billion were up 3% (1% on an underlying basis) owing to a strong Risk and Insurances Services Segment.
Acquisitions form one of the core growth strategies at Marsh and McLennan. The company made numerous purchases within its different operating units that enabled it to enter new geographical regions, expand within those that are currently running, foray into new businesses, develop new segments and specialize within its existing businesses. The company’s last-year acquisition of JLT expanded its capabilities going forward. The Risk and Insurance Services segment completed two acquisitions in the first quarter of 2020. It continued to build MMA through buyouts.
The company has maintained consistent cash flow generation for the past many years. In July 2020, its board of directors hiked 2.2% of its quarterly cash dividend, reflecting the 11th consecutive year of dividend increase. Marsh & McLennan’s current dividend yield of 1.6% is higher than the industry average of 1.4%. Although it doesn’t expect to buy back shares for 2020, we remain hopeful that the same will be resumed once the pandemic effect ends.
Moreover, the company’s 31.2% ROE betters its industry average of 27.4%, reflecting its efficiency in utilizing its shareholders’ funds.
However, the company’s operating expenses escalated over the last several years due to higher compensation and benefits. A persistent elevation of expenses might weigh on the company’s margins.
For 2020, its earnings estimate stands at $4.92, indicating an upside of 5.6% from the year-ago reported figure.
Zacks Rank and Price Performance
Shares of Marsh & McLennan, which currently carries a Zacks Rank #3 (Hold), have gained 9.8% in the past year compared with the industry’s growth of 7.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s peers, namely Arthur J. Gallagher & Co. (AJG - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Aon plc (AON - Free Report) have also rallied 26.2%, 24.4% and 3.2%, respectively, in the same time frame
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>