Shares of Marsh & McLennan (MMC - Free Report) reached a 52-week high of $88.22 in Friday’s trading session before closing a tad lower at $87.76, primarily on the back of its solid performance in the third quarter.
The stock has gained 5.7% in a year’s time, underperforming the industry’s growth of 10%.
We believe that this company has great growth potential, also apparent from its long-term earnings growth rate of 12.50%, higher than the industry’s average of 11.40%.
Marsh & McLennan retained investors' favorable sentiments surrounding the stock with an earnings beat in the third quarter wherein it maintained its trend of surpassing estimates in three of the last four reported quarters, the average positive surprise being 4.95%.
The company delivered third-quarter 2018 adjusted earnings per share of 78 cents, outpacing the Zacks Consensus Estimate by 4%. Its revenues of $3.5 billion also trumped the Zacks Consensus Estimate by 3% as well as rose 5% year over year. This upside was mainly driven by the Risk and Insurances Services as well as Consulting Segments.
On the back of a solid contribution from Marsh, its Risk and Insurance Services segment’s revenues totaled $1.9 billion, up 4% year over year. Another unit of this segment, Guy Carpenter, also delivered robust results with revenues rising 11% year over year.
Even its Consulting segment reported 5% revenue growth on the back of its thriving units, namely Mercer and Oliver Wyman Group.
The company’s 52 week high is also attributable to realizing a gain of $46 million on the sale of a business in its Marsh unit.
Marsh & McLennan is also set to buy Jardine Lloyd Thompson Group, which is expected to close during the spring of 2019. Investors are also impressed by the company’s efficient capital deployment. It bought back shares worth $175 million during the third quarter of 2018.
We believe that this company holds great growth promise, courtesy of its numerous acquisitions and a niche position in its market.
Stocks to Consider
Marsh and McLennan carries a Zacks Rank #3 (Hold). Investors interested in the insurance sector might consider a few better-ranked stocks like Willis Towers Watson Public Limited Company (WLTW - Free Report) , eHealth, Inc. (EHTH - Free Report) and Prudential Financial, Inc. (PRU - Free Report) .
Willis Towers works as an advisory, broking and solutions company worldwide. The company carries a Zacks Rank #2 (Buy) and managed to deliver positive results in the trailing four reported quarters, the average beat being 7.13%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
eHealth offers private online health insurance exchange services in the United States and China. It holds a Zacks Rank of 2 and came up with an average three-quarter positive surprise of 7.29%.
Prudential Financial offers insurance, investment management and other financial products as well as services. It is a Zacks #2 Ranked stock and pulled off an average four-quarter beat of 1.13%.
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