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Marsh & McLennan (MMC) to Report Q2 Earnings: What to Expect

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC will release second-quarter 2020 results on Jul 30, before the market opens.

In the last reported quarter, Marsh & McLennan delivered adjusted earnings per share of $1.64, surpassing the Zacks Consensus Estimate by 5.1% on the back of solid revenues. Moreover, the same improved 8% year over year. Revenues worth $4.7 billion were up 5% year over year on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. However, the top line missed the Zacks Consensus Estimate by 0.1%.

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

The Risk and Insurance Services segment is expected to have witnessed favorable results in the to-be reported quarter, backed by Guy Carpenter. The consensus mark of $2.6 billion for Risk and Insurance Services segment’s revenues is almost in line with the year-earlier reported number. The consensus estimate for Marsh and Guy Carpenter revenues of $2.1 billion and $399 million each indicates a decline of 0.4% and an increase of 1.8% from the respective year-earlier reported figures.

Per its last earnings call, Guy Carpenter is expected to witness mid single-digit underlying growth for the current year with a stronger first half and a weaker second half.

The Consulting segment is likely to have witnessed muted performances in the second quarter. On its last conference call, management had predicted that Mercer could witness deteriorating underlying revenues for the rest of the year. The Zacks Consensus Estimate for revenues from the Consulting segment of $1.6 billion indicates an 8.1% decrease from the prior-year reported figure. The consensus mark for revenues of $1.2 billion and $436 million from Mercer and Oliver Wyman each implies a fall of 3.3% and 19.3% from the respective prior-year reported numbers.

During its last earnings call, management had expected Oliver Wyman to witness a pullback in underlying revenues for the second quarter.

The Zacks Consensus Estimate for Marsh & McLennan’s second-quarter earnings of $1.14 per share hints at a 3.4% dip from the prior-year reported number due to lower revenues.Likewise, the consensus estimate for sales of $4.1 billion suggests a 4.2% slip from the year-ago reported figure.

According to its last investors’ call, management estimated a foreign exchange headwind of around 86 cents per share for the remaining year.
Further, management had announced that it doesn’t expect to repurchase shares this year.

An elevated expense level might have persistently weighed on the margins.

For the second quarter, the company anticipated to incur $140 million interest expenses, almost in line with the year-ago reported figure.

What the Quantitative Model Predicts

Our proven model predicts an earnings beat for Marsh & McLennan this time around. The 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Marsh & McLennan has an Earnings ESP of +3.95%. This is because the Most Accurate Estimate is pegged at $1.19, higher than the Zacks Consensus Estimate of $1.14. 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 and EPS Surprise

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

Zacks Rank: Marsh & McLennan currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP.

Other Stocks to Consider

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

The Allstate Corporation ALL has an Earnings ESP of +11.10% and a Zacks Rank of 3, currently. The company is scheduled to release second-quarter earnings on Aug 4.

American Financial Group AFG is slated to announce second-quarter earnings on Aug 4. The stock has an Earnings ESP of +21.45% and a Zacks Rank #2 at present.

Lincoln National Corporation LNC is set to report second-quarter earnings on Aug 5. The stock is currently a #3 Ranked player and has an Earnings ESP of +2.49%.

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