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Marsh & McLennan is Trading at a Discount: Should You Buy Now or Wait?
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Key Takeaways
Marsh & McLennan targets mid-single-digit underlying revenue growth in 2025.
Risk and Insurance Services delivers strong results and leads revenue contribution.
Rising compensation costs are weighing on margins despite steady business growth.
Shares of Marsh & McLennan Companies, Inc. (MMC - Free Report) are trading at a discount compared to the Zacks Insurance - Brokerage industry. Its forward price-to-earnings value of 19.49X is lower than its five-year median of 23.09X and the industry average of 19.79X.
Image Source: Zacks Investment Research
Shares of other insurers, such as WillisTowers Watson Public Limited Company (WTW - Free Report) and Aon plc (AON - Free Report) are also trading at a multiple lower than the industry average. Willis Towers is trading at 18.28 and AON is trading at 19. However, Brown & Brown, Inc. (BRO - Free Report) shares are trading at a premium at 19.96.
MMC’s Price Performance
Shares of Marsh & McLennan have lost 6.8 % in the year-to-date period compared with the industry’s decline of 16.8%. The Finance sector and the Zacks S&P 500 Composite have gained 13.6% and 13.2%, respectively, in the same time frame.
The insurer has a market capitalization of $97.3 billion. The average volume of shares traded in the last three months was 2.4 million.
MMC vs Industry, Sector & S&P 500 YTD
Image Source: Zacks Investment Research
Projections for MMC
The Zacks Consensus Estimate for 2025 revenues is pegged at $27 billion, implying a year-over-year improvement of 10.4%. The consensus estimate for MMC’s current-year earnings is pegged at $9.57 per share, up 8.8% from the year-ago reported figure. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 8.3% and 5.4%, respectively, from 2025 estimates.
Analyst Sentiment on MMC
The Zacks Consensus Estimate for 2025 and 2026 earnings has moved down by a penny over the past month.
Image Source: Zacks Investment Research
Average Target Price for MMC Suggests Upside
Based on short-term price targets offered by 19 analysts, the Zacks average price target is $234.58 per share. The average indicates a potential 18.5% upside from the last closing price.
Image Source: Zacks Investment Research
MMC’s Favorable Return on Capital
Return on equity for the trailing 12 months was 31.9%, comparing favorably with the industry’s 25.5%. This reflects its efficiency in utilizing shareholders’ funds.
Key Points to Note for MMC
Marsh & McLennan has steadily built a strong base for growth, supported by its broad global reach and consistent client loyalty. Over the years, the company has consistently delivered favorable operating results, with product innovations and the entry into new markets further adding to its momentum.
At the same time, the push toward digital upgrades and expansion into fresh business lines is expected to open more opportunities. Looking ahead, management remains confident of achieving mid-single-digit underlying revenue growth in 2025.
Much of the recent strength has stemmed from the Risk and Insurance Services unit, which is anchored by Marsh and Guy Carpenter. The segment has consistently posted solid results, fueled by steady renewals and new business across geographies. It remains the largest revenue contributor, underscoring its importance to the overall portfolio. Marsh McLennan Agency has further bolstered this position through targeted acquisitions, bringing in regional brokers and sector specialists to widen its reach and capabilities. Beyond its organic drivers, Marsh & McLennan has also leveraged acquisitions as a key means of expansion. The company has actively used buyouts to enter new regions, strengthen its foothold in existing markets, and branch into specialized areas of business. These deals have not only broadened the scope of operations but also added depth to its portfolio, which may help the firm achieve durable long-term growth. Return on invested capital in the trailing 12 months was 10.5%, better than the industry average of 8.7%, reflecting MMC’s efficiency in utilizing funds to generate income.
Wealth Distribution of MMC
Marsh & McLennan underscores its focus on shareholder value through prudent capital management. Dividends have been raised five times over the past five years, resulting in an annualized growth rate of 14.5%, with a current payout ratio of 35%.
Headwinds Faced By MMC
While growth drivers remain intact, rising costs have started to pressure margins. Over the past few years, operating expenses have increased steadily, primarily due to higher salaries and incentive payouts. The trend of rise in operating expenses accelerated to 11.8% in the first half of 2025, reflecting a sharp increase in compensation costs. Even though management maintains confidence in delivering healthy earnings, the persistent increase in expenses poses a challenge to sustaining margin strength.
Alongside rising costs, debt levels remain a key concern for Marsh & McLennan. As of June 2025, the company carries $19 billion in debt. Over the trailing 12 months, its debt-to-capital ratio stood at 55.3%, above the industry average of 50.1%. Maintaining this level of debt requires consistent servicing, and any disruption could affect the company’s financial stability and credit profile.
Conclusion
Overall, Marsh & McLennan continues to benefit from strong organic growth, a diversified global presence, and strategic acquisitions that expand its reach and capabilities. However, rising operating costs and a substantial debt burden could put pressure on margins and limit financial flexibility.
Image: Shutterstock
Marsh & McLennan is Trading at a Discount: Should You Buy Now or Wait?
Key Takeaways
Shares of Marsh & McLennan Companies, Inc. (MMC - Free Report) are trading at a discount compared to the Zacks Insurance - Brokerage industry. Its forward price-to-earnings value of 19.49X is lower than its five-year median of 23.09X and the industry average of 19.79X.
Shares of other insurers, such as WillisTowers Watson Public Limited Company (WTW - Free Report) and Aon plc (AON - Free Report) are also trading at a multiple lower than the industry average. Willis Towers is trading at 18.28 and AON is trading at 19. However, Brown & Brown, Inc. (BRO - Free Report) shares are trading at a premium at 19.96.
MMC’s Price Performance
Shares of Marsh & McLennan have lost 6.8 % in the year-to-date period compared with the industry’s decline of 16.8%. The Finance sector and the Zacks S&P 500 Composite have gained 13.6% and 13.2%, respectively, in the same time frame.
The insurer has a market capitalization of $97.3 billion. The average volume of shares traded in the last three months was 2.4 million.
MMC vs Industry, Sector & S&P 500 YTD
Projections for MMC
The Zacks Consensus Estimate for 2025 revenues is pegged at $27 billion, implying a year-over-year improvement of 10.4%. The consensus estimate for MMC’s current-year earnings is pegged at $9.57 per share, up 8.8% from the year-ago reported figure. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 8.3% and 5.4%, respectively, from 2025 estimates.
Analyst Sentiment on MMC
The Zacks Consensus Estimate for 2025 and 2026 earnings has moved down by a penny over the past month.
Average Target Price for MMC Suggests Upside
Based on short-term price targets offered by 19 analysts, the Zacks average price target is $234.58 per share. The average indicates a potential 18.5% upside from the last closing price.
MMC’s Favorable Return on Capital
Return on equity for the trailing 12 months was 31.9%, comparing favorably with the industry’s 25.5%. This reflects its efficiency in utilizing shareholders’ funds.
Key Points to Note for MMC
Marsh & McLennan has steadily built a strong base for growth, supported by its broad global reach and consistent client loyalty. Over the years, the company has consistently delivered favorable operating results, with product innovations and the entry into new markets further adding to its momentum.
At the same time, the push toward digital upgrades and expansion into fresh business lines is expected to open more opportunities. Looking ahead, management remains confident of achieving mid-single-digit underlying revenue growth in 2025.
Much of the recent strength has stemmed from the Risk and Insurance Services unit, which is anchored by Marsh and Guy Carpenter. The segment has consistently posted solid results, fueled by steady renewals and new business across geographies. It remains the largest revenue contributor, underscoring its importance to the overall portfolio. Marsh McLennan Agency has further bolstered this position through targeted acquisitions, bringing in regional brokers and sector specialists to widen its reach and capabilities. Beyond its organic drivers, Marsh & McLennan has also leveraged acquisitions as a key means of expansion. The company has actively used buyouts to enter new regions, strengthen its foothold in existing markets, and branch into specialized areas of business. These deals have not only broadened the scope of operations but also added depth to its portfolio, which may help the firm achieve durable long-term growth. Return on invested capital in the trailing 12 months was 10.5%, better than the industry average of 8.7%, reflecting MMC’s efficiency in utilizing funds to generate income.
Wealth Distribution of MMC
Marsh & McLennan underscores its focus on shareholder value through prudent capital management. Dividends have been raised five times over the past five years, resulting in an annualized growth rate of 14.5%, with a current payout ratio of 35%.
Headwinds Faced By MMC
While growth drivers remain intact, rising costs have started to pressure margins. Over the past few years, operating expenses have increased steadily, primarily due to higher salaries and incentive payouts. The trend of rise in operating expenses accelerated to 11.8% in the first half of 2025, reflecting a sharp increase in compensation costs. Even though management maintains confidence in delivering healthy earnings, the persistent increase in expenses poses a challenge to sustaining margin strength.
Alongside rising costs, debt levels remain a key concern for Marsh & McLennan. As of June 2025, the company carries $19 billion in debt. Over the trailing 12 months, its debt-to-capital ratio stood at 55.3%, above the industry average of 50.1%. Maintaining this level of debt requires consistent servicing, and any disruption could affect the company’s financial stability and credit profile.
Conclusion
Overall, Marsh & McLennan continues to benefit from strong organic growth, a diversified global presence, and strategic acquisitions that expand its reach and capabilities. However, rising operating costs and a substantial debt burden could put pressure on margins and limit financial flexibility.
Given the price erosion and discounted valuation, it is better to remain cautious on this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.