Estimates for Marsh & McLennan Companies, Inc. (MMC - Free Report) have been revised upward over the past 30 days, mirroring analysts’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings being raised 0.2% and 0.3% to $4.33 and $4.78, respectively.
Marsh & McLennan is a globally leading insurance broker. Shares of this Zacks Rank #3 (Hold) insurance broker have inched up 0.4% year to date, underperforming the industry’s growth of 4%.
Let’s narrow down to the factors that bolster Marsh & McLennan stock to hold on to for higher returns.
Compelling Inorganic Growth Story: Marsh & McLennan has strengthened its growth profile via prudent acquisitions, which helped it expand geographies and add capabilities to its portfolio. Acquisitions have already been accretive to operational results.
Improving Top Line: Diverse product offerings, a wide geographic footprint and strong client retention have been fueling the company’s top-line improvement over the last several quarters. For 2018, the company expects revenues to grow in the 3-5% range.
Disciplined Cost Management Drives Bottom-Line Growth: Marsh& McLennan has been divesting its redundant units and moderating expenses on compensation and benefits plus other operations. These in turn have enhanced its operating leverage, aiding the bottom line.
Effective Capital Management: Expense management and projected earnings growth will continue to effect a solid capital position. While the company has hiked its quarterly dividend at a 5-year CAGR of 8.4%, its dividend yield of 1.9% betters the industry average of 0.8%. Marsh & McLennan estimates capital deployment of about $2.5 billion in 2018 through share buybacks and dividend growth per share by double digits. These make the stock an attractive choice for yield-seeking investors.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $4.33, representing a year-over-year increase of 10.5% on 6.9% higher revenues of nearly $15 billion.
For 2019, the consensus mark for earnings per share is pegged at $4.78 on $15.8 billion revenues, thereby translating into a respective 10.2% and 5.5% year-over-year rise.
Marsh & McLennan has an expected long-term earnings per share growth rate of 12.7%.
Positive Earnings Surprise History: The company dwells on a decent earnings surprise history, having outpaced the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 4.5%. This trend of consecutive estimate beats echoes the company’s operational excellence.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Alleghany Corporation (Y - Free Report) , Markel Corporation (MKL - Free Report) and RLI Corp. (RLI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 17.61%.
Markel markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada and internationally. The company came up with positive surprises in two of the last four quarters with an average beat of 15.54%.
RLI Corp. underwrites property and casualty insurance in the United States and internationally. The company pulled off positive surprises in each of the last four quarters with an average beat of 33.65%.
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