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Is a Beat in Store for Marsh & McLennan's (MMC) Q3 Earnings?

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC will release third-quarter 2019 results on Oct 29, before the market opens.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 69 cents, suggesting a 11.5% decline from the year-ago reported figure.

In the last reported quarter, Marsh & McLennan delivered adjusted earnings per share of $1.18, surpassing the Zacks Consensus Estimate by 4.4% on the back of higher revenues. Also, the bottom line improved 7.3% year over year.

Let’s see, how things are shaping up prior to this announcement.

The company’s overall results in the third quarter of 2019 are likely to bear the brunt of lower adjusted operating income in the Risk & Insurance Services business due to weak performance by its Guy Carpenter segment. The consensus mark for the adjusted operating income from the business indicates a decline of 8.5% from the year-earlier reported number.

Moreover, its debt-to-equity ratio jumped from 70.2% in 2017 to 72.7% in 2018 and 137.5% in the first half of 2019. The same is likely to have continued in the third quarter of 2019.

However, the downside might have been partly offset by the company’s improving revenues in the third quarter of 2019. The Zacks Consensus Estimate for total revenues is pegged at $4 billion, hinting at 14.2% improvement from the prior-year reported number.

The Consulting business has been favoring the company’s revenue base over the last few quarters on the back of its Mercer and Oliver Wyman Group units, a trend that most likely continued in the third quarter. The consensus estimate for revenues from this segment implies 7.9% growth from the year-earlier reported figure.

The company is expected to have deployed its capital to add shareholder value on the back of its impressive balance sheet.

What the Quantitative Model Predicts

Our proven model predicts an earnings beat for Marsh & McLennan this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Marsh & McLennan has an Earnings ESP of +2.90%. This is because the Most Accurate Estimate is pegged at 71 cents, higher than the Zacks Consensus Estimate of 69 cents.

Marsh & McLennan Companies, Inc. Price and EPS Surprise

Marsh & McLennan Companies, Inc. Price and EPS Surprise

Marsh & McLennan Companies, Inc. price-eps-surprise | Marsh & McLennan Companies, Inc. Quote

Zacks Rank: Marsh & McLennan carries a Zacks Rank #3. Further, a positive ESP increases the odds of an earnings beat this season.

Other Stocks to Consider

Some other stocks worth considering from the insurance industry with the perfect mix of elements to also surpass estimates in the next releases are as follows:

Hallmark Financial Services, Inc. HALL is set to report third-quarter earnings on Nov 7. The stock has a Zacks Rank of 3 and an Earnings ESP of +3.03%. You can see the complete list of today’s Zacks #1 Rank stocks here.

NMI Holdings Inc NMIH has an Earnings ESP of +1.64%. This Zacks #3 Ranked player is scheduled to release third-quarter earnings on Nov 6.

Radian Group Inc. RDN is slated to announce third-quarter earnings on Oct 30. The stock has an Earnings ESP of +1.39% and a Zacks Rank #2.

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Radian Group Inc. (RDN) : Free Stock Analysis Report
 
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Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report
 
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