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What's in the Cards for Marsh & McLennan (MMC) Q1 Earnings?

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC will release first -quarter 2019 results on Apr 25, before the market opens. In the last reported quarter, the company delivered a positive earnings surprise of 5.8%, backed by solid performances by its Risk and Insurance plus Consulting segments.

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

Aided by its solid segments, revenues of the company are likely to have witnessed an upside in the to-be-reported quarter. The Risk and Insurance Services line is expected to perform well owing to a strong uptick in Marsh and Guy Carpenter division. The consensus mark for revenues from this segment stands at $2.5 billion, up 4.7% from the year-ago reported number. The company’s constant efforts in effecting alliances and acquisitions poise the segment well for growth.

The Consulting segment has also been favoring the company’s revenue base over the last few quarters and will possibly maintain this trend in the first quarter of 2019 as well. The consensus estimate for revenues from this segment stands at $1.7 billion, implying 4.9% growth from the year-earlier reported figure.

The Zacks Consensus Estimate for total revenues is pegged at $4.2 billion, suggesting 5.1% growth from the year-ago reported number. The same for first-quarter earnings is pegged at $1.46, indicating 5.8% growth from the prior-year reported figure, supported by higher revenues. 

However, adverse foreign exchange volatility might be a drag on the company’s first-quarter earnings. 

The company could have suffered high debts due to certain buyouts, which worsen its financial risk. Expenses too probably have escalated in the quarter under review due to increased compensation and benefits, which might weigh on its margins.

What the Quantitative Model States

Our proven model does not conclusively show that Marsh & McLennan is likely to beat on earnings this reporting cycle. This is because the stock does not have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Marsh & McLennan has an Earnings ESP of -2.74% as the Most Accurate Estimate of $1.42 is pegged lower than the Zacks Consensus Estimate of $1.46. 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. Quote

Zacks Rank: Marsh & McLennan carries a Zacks Rank #3, which increases the predictive power of ESP. However, chances of an earnings beat are slim here with a negative ESP as only a positive value in the combination can make a company confident about a likely earnings surprise. Thus, surprise prediction is left inconclusive here for the stock.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

Everest Re Group, Ltd. RE is set to report first-quarter earnings on May 6. The stock has a Zacks Rank of 3 and an Earnings ESP of +10.82%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation ALL has an Earnings ESP of +5.02%. This Zacks #3 Ranked player is scheduled to release first-quarter earnings on May 1.

Renaissance Holdings Ltd.    RNR is slated to announce first-quarter earnings on May 7. The stock has an Earnings ESP of +3.43% and a Zacks Rank #2.

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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
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