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Can Marsh & McLennan (MMC) Sustain Its Beat Streak in Q4 Earnings?
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Marsh & McLennan Companies, Inc. (MMC - Free Report) is slated to report fourth-quarter 2022 results on Jan 26, 2023, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MMC’s fourth-quarter earnings per share is pegged at $1.40, which indicates a rise of 2.9% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $1.33 per share.
The consensus mark for revenues is pegged at $5,234 million, suggesting 1.9% growth from the year-ago quarter’s reported figure. Our estimate indicates total revenues of $5,063.5 million for the fourth quarter.
Earnings Surprise History
Marsh & McLennan boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
Marsh & McLennan Companies, Inc. Price and EPS Surprise
Our proven model conclusively 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 an earnings beat, which is the case here.
Earnings ESP: Marsh & McLennan has an Earnings ESP of +0.36% because the Most Accurate Estimate of $1.41 is pegged higher than the Zacks Consensus Estimate of $1.40. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Revenues of Marsh & McLennan are likely to have benefited on the back of solid contributions from Risk and Insurance Services as well as Consulting segments in the fourth quarter.
The Risk and Insurance Services segment is expected to have been aided by the strong performances of its sub-units — Marsh and Guy Carpenter. Performances of both sub-divisions are expected to have gained on business generation and solid retention rates in the to-be-reported quarter.
The Zacks Consensus Estimate for MMC’s Risk and Insurance Services segment’s revenues is pegged at $3,162 million, indicating an improvement of 3.7% from the prior-year quarter’s reported level and higher than our estimate of $2,968 million. The consensus mark for adjusted operating income of the segment stands at $682 million, suggesting 22.4% growth from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for revenues at Marsh and Guy Carpenter sub-units hints toward increases of 0.8% and 22.4%, from their respective prior-year quarter reported numbers.
The Consulting segment of Marsh & McLennan is likely to have been favored by strong contributions from its branches — Mercer and Oliver Wyman. Continued solid demand for workforce transformation solutions and sound contribution from those geographies, wherein MMC operates, are expected to have contributed to the sub-units' performance in the fourth quarter. However, persistent inflationary pressures putting strain on equity and fixed-income markets are likely to have offset the segment’s revenues.
The Zacks Consensus Estimate for the Consulting segment’s revenues is pegged at $2,128 million, which indicates growth of 1.4% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $2,112.6 million. The consensus mark for the segment’s adjusted operating income stands at $383 million, suggesting a 6.6% fall from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for revenues of the Mercer sub-division indicates a 0.8% dip from the prior-year quarter’s level, while the same for Oliver Wyman revenues suggests 6% growth.
However, MMC’s margins are expected to have taken a hit from escalating compensation and benefits costs, coupled with expenses related to talent investments in the to-be-reported quarter.
Per the last earnings call, foreign exchange is expected to have an adverse impact of 7 cents per share on Marsh & McLennan’s margins in the fourth quarter. Management estimated interest expenses of $121 million in the to-be-reported quarter.
Other Stocks to Consider
Here are some other companies from the insurance space, which, according to our model, have the right combination of elements to beat on earnings this time around:
Aon plc (AON - Free Report) currently has an Earnings ESP of +1.52% and a Zacks Rank of 2. The Zacks Consensus Estimate for AON’s fourth-quarter 2022 earnings is pegged at $3.67 per share, indicating a decline of 1.1% from the prior-year quarter’s reported number.
Aon’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.83%.
Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for PRU’s fourth-quarter 2022 earnings stands at $2.57 per share, suggesting a 19.2% fall from the year-ago quarter’s reported figure.
Prudential Financial’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 3.64%.
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +5.42% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for ACGL’s fourth-quarter 2022 earnings is pegged at $1.34 per share, which indicates an improvement of 5.5% from the prior-year quarter’s reported figure.
Arch Capital’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 15.37%.
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Can Marsh & McLennan (MMC) Sustain Its Beat Streak in Q4 Earnings?
Marsh & McLennan Companies, Inc. (MMC - Free Report) is slated to report fourth-quarter 2022 results on Jan 26, 2023, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for MMC’s fourth-quarter earnings per share is pegged at $1.40, which indicates a rise of 2.9% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $1.33 per share.
The consensus mark for revenues is pegged at $5,234 million, suggesting 1.9% growth from the year-ago quarter’s reported figure. Our estimate indicates total revenues of $5,063.5 million for the fourth quarter.
Earnings Surprise History
Marsh & McLennan boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
Marsh & McLennan Companies, Inc. Price and EPS Surprise
Marsh & McLennan Companies, Inc. price-eps-surprise | Marsh & McLennan Companies, Inc. Quote
What Our Quantitative Model Unveils
Our proven model conclusively 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 an earnings beat, which is the case here.
Earnings ESP: Marsh & McLennan has an Earnings ESP of +0.36% because the Most Accurate Estimate of $1.41 is pegged higher than the Zacks Consensus Estimate of $1.40. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MMC currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note
Revenues of Marsh & McLennan are likely to have benefited on the back of solid contributions from Risk and Insurance Services as well as Consulting segments in the fourth quarter.
The Risk and Insurance Services segment is expected to have been aided by the strong performances of its sub-units — Marsh and Guy Carpenter. Performances of both sub-divisions are expected to have gained on business generation and solid retention rates in the to-be-reported quarter.
The Zacks Consensus Estimate for MMC’s Risk and Insurance Services segment’s revenues is pegged at $3,162 million, indicating an improvement of 3.7% from the prior-year quarter’s reported level and higher than our estimate of $2,968 million. The consensus mark for adjusted operating income of the segment stands at $682 million, suggesting 22.4% growth from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for revenues at Marsh and Guy Carpenter sub-units hints toward increases of 0.8% and 22.4%, from their respective prior-year quarter reported numbers.
The Consulting segment of Marsh & McLennan is likely to have been favored by strong contributions from its branches — Mercer and Oliver Wyman. Continued solid demand for workforce transformation solutions and sound contribution from those geographies, wherein MMC operates, are expected to have contributed to the sub-units' performance in the fourth quarter. However, persistent inflationary pressures putting strain on equity and fixed-income markets are likely to have offset the segment’s revenues.
The Zacks Consensus Estimate for the Consulting segment’s revenues is pegged at $2,128 million, which indicates growth of 1.4% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $2,112.6 million. The consensus mark for the segment’s adjusted operating income stands at $383 million, suggesting a 6.6% fall from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for revenues of the Mercer sub-division indicates a 0.8% dip from the prior-year quarter’s level, while the same for Oliver Wyman revenues suggests 6% growth.
However, MMC’s margins are expected to have taken a hit from escalating compensation and benefits costs, coupled with expenses related to talent investments in the to-be-reported quarter.
Per the last earnings call, foreign exchange is expected to have an adverse impact of 7 cents per share on Marsh & McLennan’s margins in the fourth quarter. Management estimated interest expenses of $121 million in the to-be-reported quarter.
Other Stocks to Consider
Here are some other companies from the insurance space, which, according to our model, have the right combination of elements to beat on earnings this time around:
Aon plc (AON - Free Report) currently has an Earnings ESP of +1.52% and a Zacks Rank of 2. The Zacks Consensus Estimate for AON’s fourth-quarter 2022 earnings is pegged at $3.67 per share, indicating a decline of 1.1% from the prior-year quarter’s reported number.
Aon’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.83%.
Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for PRU’s fourth-quarter 2022 earnings stands at $2.57 per share, suggesting a 19.2% fall from the year-ago quarter’s reported figure.
Prudential Financial’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 3.64%.
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +5.42% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for ACGL’s fourth-quarter 2022 earnings is pegged at $1.34 per share, which indicates an improvement of 5.5% from the prior-year quarter’s reported figure.
Arch Capital’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 15.37%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.