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Why You Should Hold Marsh & McLennan (MMC) in Your Portfolio
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Marsh & McLennan Companies, Inc. (MMC - Free Report) has been in investors' good books on the back of its strategic initiatives that led to expansion of business and a strong capital position.
It retained investors' favorable sentiment by maintaining its trend of surpassing estimates in all the last four quarters, the average positive surprise being 5.4%. This reflects its operational excellence.
The company’s operating efficiency, driven by its diverse product offerings, a wide geographic footprint and strong client retention is worth mentioning. This also contributed to its growing top line. Moreover, revenues have been increasing consistently since 2010 (except in 2015). A number of acquisitions made over the past many years, significant capital expenditures undertaken for growth, launch of products and services, enhancements of digital capabilities and branching out into new businesses further bode well.
The company’s numerous purchases within its different operating units has enabled it to penetrate new geographies, expand within the existing ones, foray into new businesses, develop new segments and also specialize within its existing operations. In 2019 too, it closed the pending acquisition of Jardine Lloyd Thompson Group plc for $5.8 billion. Further, its Marsh and Mercer units have been constantly acquiring companies to enhance their abilities. Its Marsh unit acquired Assurance Holdings, Inc., one of the leading independent agencies in the United States this month. Its focus on the larger end of customer segment poise it well for long-term haul.
The company sustained a solid balance sheet and financial flexibility, leading to cash flow generation over the past many years. Its disciplined capital management through share buyback and dividend payments also cemented investors’ confidence in the stock. Its dividend yield stands at 1.83%, higher than its industry average of 1.53%. The company’s initiatives to enhance shareholder value should buoy investor’s optimism on the stock.
However, the company’s operating expenses escalated over the last several years due to higher compensation and benefits. The same further increased 14.7% in 2019 on account of increased compensation and benefits as well as other operating costs. A persistent escalation of expenses might weigh on the company’s margins.
Its long-term growth rate stands at 11.30%, above its industry’s average of 10.20%, which should instill investors’ trust in the stock.
The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $5.04, suggesting an 8.2% rise on 7.1% higher revenues of $17.8 billion from the year-ago reported figures.
Nevertheless, its solid fundamentals will likely help it bounce back going forward.
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Why You Should Hold Marsh & McLennan (MMC) in Your Portfolio
Marsh & McLennan Companies, Inc. (MMC - Free Report) has been in investors' good books on the back of its strategic initiatives that led to expansion of business and a strong capital position.
It retained investors' favorable sentiment by maintaining its trend of surpassing estimates in all the last four quarters, the average positive surprise being 5.4%. This reflects its operational excellence.
The company’s operating efficiency, driven by its diverse product offerings, a wide geographic footprint and strong client retention is worth mentioning. This also contributed to its growing top line. Moreover, revenues have been increasing consistently since 2010 (except in 2015). A number of acquisitions made over the past many years, significant capital expenditures undertaken for growth, launch of products and services, enhancements of digital capabilities and branching out into new businesses further bode well.
The company’s numerous purchases within its different operating units has enabled it to penetrate new geographies, expand within the existing ones, foray into new businesses, develop new segments and also specialize within its existing operations. In 2019 too, it closed the pending acquisition of Jardine Lloyd Thompson Group plc for $5.8 billion. Further, its Marsh and Mercer units have been constantly acquiring companies to enhance their abilities. Its Marsh unit acquired Assurance Holdings, Inc., one of the leading independent agencies in the United States this month.
Its focus on the larger end of customer segment poise it well for long-term haul.
The company sustained a solid balance sheet and financial flexibility, leading to cash flow generation over the past many years. Its disciplined capital management through share buyback and dividend payments also cemented investors’ confidence in the stock. Its dividend yield stands at 1.83%, higher than its industry average of 1.53%. The company’s initiatives to enhance shareholder value should buoy investor’s optimism on the stock.
However, the company’s operating expenses escalated over the last several years due to higher compensation and benefits. The same further increased 14.7% in 2019 on account of increased compensation and benefits as well as other operating costs. A persistent escalation of expenses might weigh on the company’s margins.
Its long-term growth rate stands at 11.30%, above its industry’s average of 10.20%, which should instill investors’ trust in the stock.
The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $5.04, suggesting an 8.2% rise on 7.1% higher revenues of $17.8 billion from the year-ago reported figures.
Shares of this Zacks Rank #3 (Hold) company have gained 4.1% in the past year, in line with its industry’s growth. The performance looks pale in comparison to other stocks in the same space, such as Brown & Brown, Inc. (BRO - Free Report) , eHealth, Inc. (EHTH - Free Report) and Aon Plc (AON - Free Report) , which have returned 29%, 84.6% and 9.7% in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nevertheless, its solid fundamentals will likely help it bounce back going forward.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>