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What's in Store for Marsh & McLennan (MMC) Q2 Earnings?

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC will release second-quarter 2019 results on Jul 30, before the market opens. In the last reported quarter, the company delivered a positive surprise of 4.8%, backed by solid performances by its Risk and Insurance plus Consulting segments. Also, the bottom line improved 10.1% year over year.

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

Aided by its sturdy segments, the company is likely to perform well in the to-be-reported quarter. The Zacks Consensus Estimate for total revenues is pegged at $4.3 billion, suggesting 16.1% improvement from the year-ago reported number.

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.13, indicating 2.7% growth from the prior-year reported figure, supported by higher revenues.

The Risk and Insurance Services line of the company is expected to perform well on the back of both its Marsh and Guy Carpenter divisions. The consensus mark for second-quarter revenues from Marsh and Guy Carpenter indicates an upside of 9.2% and 3.6%, respectively, from the prior-year reported figures. 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 second quarter of 2019. The consensus estimate for revenues from this segment stands at $1.7 billion, implying 5.6% growth from the year-earlier reported figure, riding on the Mercer and Oliver Wyman Group.

However, adverse foreign exchange volatility might be a drag on the company’s second-quarter earnings. Assuming same exchange rates, the company earlier projected foreign exchange to have a negative impact of 1 to 2 cents on second-quarter adjusted EPS.

The company earlier predicted second-quarter interest expenses to be around $114 million, indicating a growth of 67.6% from the prior-year reported figures.

Marsh & McLennan could have suffered high debts in the quarter due to certain buyouts.

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 shows that Marsh & McLennan is likely to beat on earnings this reporting cycle. This is because the stock has 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 +0.63% as the Most Accurate Estimate of $1.14 is pegged higher than the Zacks Consensus Estimate of $1.13. 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 carries a Zacks Rank #3, which increases the predictive power of ESP. Along with a positive ESP in the combination, chances of an earnings beat are significantly higher for the stock this time around.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

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

The Hartford Financial Services Group, Inc.    HIG is set to report second-quarter earnings on Aug 1. The stock has a Zacks Rank of 3 and an Earnings ESP of +0.63%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln National Corporation    LNC has an Earnings ESP of +0.26%. This Zacks #3 Ranked player is scheduled to release second-quarter earnings on Jul 31.

Alleghany Corporation Y is slated to announce second-quarter earnings on Aug 6. The stock has an Earnings ESP of +1.74% and a Zacks Rank #3.

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