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What's in the Cards for Marsh & McLennan (MMC) Q3 Earnings?

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Marsh & McLennan Companies, Inc. MMC) is scheduled to release third-quarter 2021 results on Oct 21, before the market opens.

In the last reported quarter, Marsh & McLennan delivered adjusted earnings per share of $1.75, surpassing the Zacks Consensus of Estimate by 23.2%. This upside is owing to a solid contribution from its Risk and Insurance Services as well as Consulting segments. The bottom line also improved 32.6% from the year-ago quarter’s level.

Q3 Estimates

The Zacks Consensus Estimate for the company’s third-quarter earnings per share is pegged at 99 cents, suggesting growth of 20.7% from the prior-year quarter’s reported figure. The consensus mark for revenues stands at $4.35 billion, indicating an improvement of 9.8% from the year-ago period’s reported number.

Factors to Note

The company is likely to have continued gaining from high revenues owing to its Risk and Insurance Services segment. However, the Consulting segment might have offset the performance to some extent.

Performance at the Risk and Insurance Services segment is likely to have benefited from strong revenues at the company’s Marsh and Guy Carpenter units. The Zacks Consensus Estimate for the company’s Risk and Insurance Services segment’s revenues is pegged at $2.57 billion, implying 12.3% growth from the prior-year quarter’s reported number.

While the U.S. and Canada division might have favored Marsh’s performance, Guy Carpenter’s performance is likely to have improved on new business generation.

The consensus estimate for its units, namely Marsh and Guy Carpenter revenues stands at $2.3 billion and $299 million each, suggesting a respective jump of 12.7% and 9.1% from the corresponding year-ago quarter’s reported figures.

The consensus mark for the Consulting segment’s revenues stands at $1.8 billion, indicating a downside of 18.9% from the year-ago quarter’s reported figure. This could be due to the disappointing performance by its Wealth and Health units.

Nevertheless, the consensus estimate for Mercer’s revenues stands at $1.2 billion, hinting at a 6.6% rise from the prior-year quarter’s reported number.
New business generation is expected to have driven growth at the Oliver Wyman segment. The consensus mark for Oliver Wyman stands at $563 million, indicating an upside of 17.3% from the prior-year quarter’s reported number.

On the down side, expenses are likely to have remained elevated in the to-be-reported quarter due to higher compensation and benefits, which might have squeezed margins to some extent.

On its last earnings call, management said that it expects around $110 million interest expense in the to-be-reported quarter.

What Our Quantitative Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Marsh & McLennan this season.  The combination of a positive  Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Earnings ESP:  Marsh & McLennan has an Earnings ESP of -0.68%. This is because the Most Accurate Estimate of 98 cents is pegged lower than the Zacks Consensus Estimate of 99 cents. You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Zacks Rank: Marsh & McLennan carries a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider 

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Voya Financial, Inc. (VOYA - Free Report) has an Earnings ESP of +6.21% and a Zacks Rank of 3, currently.

Kemper Corporation (KMPR - Free Report) has an Earnings ESP of +10.30% and is Zacks #3 Ranked, presently.

MetLife, Inc. (MET - Free Report) has an Earnings ESP of +1.21% and is a #3 Ranked player, currently.