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

Marsh & McLennan Companies, Inc. MMC is scheduled to release first-quarter 2023 results on Apr 20, before the opening bell.

Q1 Estimates

The Zacks Consensus Estimate for MMC’s first-quarter 2023 earnings per share is pegged at $2.45, which indicates an improvement of 6.5% from the prior-year quarter’s reported figure.

The consensus mark for revenues stands at $5,728 million, suggesting 3.2% growth from the year-ago quarter’s tally.

Earnings Surprise History

Marsh & McLennan boasts an impressive 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 and EPS Surprise
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 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 +3.41% because the Most Accurate Estimate of $2.53 is pegged higher than the Zacks Consensus Estimate of $2.45. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: MMC carries a Zacks Rank of 3.

Factors to Note

Strong performances exhibited by the Risk and Insurance Services and, Consulting segments are likely to have aided the top line of Marsh & McLennan in the first quarter of 2023.

The Risk and Insurance Services segment is expected to have gained on the back of solid contribution from its Marsh sub-division. Strong operations across U.S. and Canada, Latin America and the Asia Pacific might have provided an impetus to Marsh’s performance in the to-be-reported quarter. However, the softer contribution from the Guy Carpenter business, another sub-unit of the Risk and Insurance Services segment, is likely to have weighed on the segment. 

The Zacks Consensus Estimate for revenues of the Risk and Insurance Services segment is pegged at $3,672 million, indicating a rise of 3.5% from the prior-year quarter’s level. However, the consensus mark for the segment’s adjusted operating income stands at $1,209 million, suggesting a 1.5% decline from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for revenues of the Marsh sub-division implies 2.5% growth from the prior-year quarter’s level, while the same for the Guy Carpenter business’ revenues indicates a 1.6% decline.

Marsh & McLennan’s Consulting segment is expected to have gained momentum from the strong performance of its Oliver Wyman sub-unit in the first quarter. Several acquisitions pursued by Oliver Wyman, which have solidified its capabilities and geographic reach, are likely to have buoyed the performance of the sub-branch. However, reduced returns from equity and fixed-income markets are likely to have acted as a partial offset to the Mercer (another sub-unit of the Consulting segment) business in the to-be-reported quarter.

The Zacks Consensus Estimate for the Consulting segment’s revenues is pegged at $2,036 million, which indicates growth of 1.3% from the prior-year quarter’s tally. Our estimate for the metric stands at $1,934.9 million. Yet, the consensus mark for the segment’s adjusted operating income is $396 million, suggesting a 1.5% fall from the year-ago quarter’s reported number while our estimate for the metric stands at $357.1 million.

The Zacks Consensus Estimate for revenues of the Mercer sub-division indicates a 1.1% fall from the prior-year quarter’s level, while the same for the Oliver Wyman business' revenues indicates 4.6% growth.

Despite undertaking multiple cost-curbing efforts, the bottom line of Marsh & McLennan might have suffered from elevated compensation and benefits costs in the first quarter.

Per the last earnings call, foreign exchange is likely to have inflicted an adverse impact of 5 cents per share on Marsh & McLennan’s margins 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:

CNO Financial Group, Inc. CNO currently has an Earnings ESP of +5.65% and a Zacks Rank of 1.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CNO’s first-quarter 2023 earnings is pegged at 62 cents per share, indicating an improvement of 47.6% from the prior-year quarter’s reported number.

CNO Financial’s earnings beat estimates in two of the trailing four quarters, matched the mark once and missed the same on the remaining one occassion, the average surprise being 14.15%.

Everest Re Group, Ltd. RE has an Earnings ESP of +3.43% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for RE’s first-quarter 2023 earnings stands at $12.01 per share, suggesting 16.5% growth from the year-ago quarter’s reported figure.

Everest Re’s earnings beat estimates in each of the trailing four quarters, the average surprise being 18.41%.

Aon plc AON has an Earnings ESP of +1.31% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for AON’s first-quarter 2023 earnings is pegged at $5.25 per share, which indicates an improvement of 8.7% 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 2.05%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

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

Aon plc (AON) : Free Stock Analysis Report

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