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What to Expect for Marsh & McLennan's (MMC) Q4 Earnings

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC will release fourth-quarter 2019 results on Jan 30, before the market opens.

In the last reported quarter, Marsh & McLennan delivered adjusted earnings per share of 77 cents, surpassing the Zacks Consensus Estimate by 11.6% on the back of solid revenues. However, the same dipped 1.3% year over year.

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

The company’s fourth-quarter earnings are likely to have gained traction from its strong top line. The Zacks Consensus Estimate for the to-be-reported quarter’s bottom line is pegged at $1.18, suggesting an 8.3% increase from the year-ago reported figure.

Its Risk and Insurance Services segment is expected to have contributed to overall revenues. The consensus mark for the same implies an upside of 25.5% from the year-earlier reported number.

The Consulting segment might have also continued performing well in the fourth quarter owing to a solid performance at Mercer and Oliver Wyman Group units. The Zacks Consensus Estimate for revenues from the Consulting segment indicates 7.7% rise from the prior-year reported figure.

The Zacks Consensus Estimate for total revenues is pegged at $4.3 billion, hinting at 17% improvement from the prior-year reported number.

The impending results might also reflect a robust operating margin expansion.

Per its last earnings call, the company expected corporate expenses to be around $50 million and interest expense to be nearly $130 million for the fourth quarter, indicating a pressure on the margins to some extent.

Regarding the company’s JLT acquisition, management on its last conference call announced that it expects the fourth-quarter amortization to be roughly $93 million.

Though Marsh as a segment has been fuelling the company’s growth over the last several quarters, it is anticipated to aid earnings moderately for the fourth quarter. The company’s Oliver Wyman might have delivered volatile performance in the fourth quarter.

During the company’s last earnings call, management declared that it expects foreign exchanges to leave a negative impact of 2 cents per share on fourth–quarter results provided the forex rate remains stable.

In the to-be-reported quarter, the company is expected to have consistently deployed capital to add shareholder value, driven by balance sheet strength.
However, an elevated expense level might have persistently weighed on the company’s margins.

What the Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Marsh & McLennan this time around. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here as you can see below.

Earnings ESP: Marsh & McLennan has an Earnings ESP of +1.70%. This is because the Most Accurate Estimate is pegged at $1.20, higher than the Zacks Consensus Estimate of $1.18. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

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 #4 (Sell), which decreases the predictive power of ESP. Therefore, this combination leaves surprise prediction inconclusive.

Stocks to Consider

Some stocks worth considering from the finance sector with the perfect mix of elements to surpass estimates in the upcoming releases are as follows:

American International Group, Inc. AIG is set to report fourth-quarter earnings on Feb 12. The stock has a Zacks Rank #3 and an Earnings ESP of +1.59%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assurant, Inc. AIZ has an Earnings ESP of +0.62%. This company with a Zacks Rank of 3 is scheduled to release fourth-quarter earnings on Feb 11.

Radian Group Inc. RDN is slated to announce fourth-quarter earnings on Feb 5. The stock has an Earnings ESP of +1.76% and is Zacks #3 Ranked.

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