Marsh & McLennan Companies, Inc. MMC will release third-quarter 2020 results on Oct 29, before the market opens.
In the last reported quarter, Marsh & McLennan delivered adjusted earnings per share of $1.32, surpassing the Zacks Consensus Estimate by 15.8% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line improved 11.9% year over year.
Let’s see, how things are shaping up prior to this announcement.
The Risk and Insurance Services segment is expected to witness favorable results for the to-be-reported quarter. Guy Carpenter is expected to have continued gaining from solid retention, robust demand driving new business and a tailwind from the current pricing environment. The consensus mark of $2.2 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 $1.9 billion and $277 million each indicates an increase of 0.6% and 1.5% from the respective year-earlier reported figures.
Per the company’s last earnings call, Guy Carpenter is expected to face a difficult third quarter. Management had also stated that it projects Mercer's underlying revenues to decline for the remaining year.
The Consulting segment is also likely to have witnessed muted performances in the third quarter. The Zacks Consensus Estimate for revenues from the Consulting segment of $1.6 billion indicates a 6.9% decrease from the prior-year reported figure. Mercer and Oliver Wyman suffered a massive adverse impact on their career business because of the lockdown. The consensus mark for Mercer revenues of $1.2 billion and the same for Oliver Wyman revenues of $439 million imply a fall of 4.5% and 13.1% each from the respective prior-year reported numbers.
The Zacks Consensus Estimate for Marsh & McLennan’s third-quarter earnings of 73 cents per share hints at a 5.2% dip from the prior-year quarter’s reported number due to lower revenues. Likewise, the consensus estimate for sales of $3.8 billion suggests a 3.3% slip from the year-ago period’s reported figure.
Although the company took several growth-oriented initiatives, we think that an elevated expense level might have persistently weighed on its margins.
Foreign exchange woes are likely to have left impact, though minimal, on the company’s third-quarter earnings.
Moreover, the company is expected to have suspended its share buyback plan in the third quarter, which in turn, couldn’t provide a cushion to its performance.
For the third quarter, management anticipated to incur $131 million interest expenses.
However, the company is likely to have maintained its solvency position on the back of initiatives taken to preserve its liquidity.
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 +7.03%. This is because the Most Accurate Estimate is pegged at 78 cents, higher than the Zacks Consensus Estimate of 73 cents. 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-eps-surprise | Marsh McLennan Companies, Inc. Quote
Zacks Rank: Marsh & McLennan currently carries a Zacks Rank #2 (Buy), 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:
Arthur J. Gallagher Co. AJG has an Earnings ESP of +1.33% and a Zacks Rank of 2, currently. The company is scheduled to release third-quarter earnings on Oct 29.
Willis Towers Watson Public Limited Company WLTW is slated to announce third-quarter earnings on Oct 29. The stock has an Earnings ESP of +3.81% and a Zacks Rank #3 at present.
Arch Capital Group Ltd. ACGL is set to report third-quarter earnings on Oct 29. The stock is currently a #3 Ranked player and has an Earnings ESP of +5.33%.
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