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Marsh & Mclennan Companies (MMC)
NYSE:MMC
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Marsh & Mclennan Companies
(NYSE:MMC)76Outperform
Positive Factors
Revenue Growth
MMC reported 7% organic growth, exceeding expectations, with strong performance in RIS and Consulting.
Negative Factors
Acquisition Risks
There is potential producer attrition and revenue leakage risk associated with the McGriff acquisition, especially in the first few years.
Operating Margins
Operating margins proved slightly unfavorable compared with forecasts, with consolidated margins at 22.7% versus estimated 24%.
Marsh & Mclennan Companies (MMC) vs. S&P 500 (SPY)
Market Cap
$116.29B
Dividend Yield1.33%
Average Volume (3M)2.13M
Price to Earnings (P/E)28.9
Beta (1Y)0.40
Revenue Growth7.60%
EPS Growth8.66%
CountryUS
Employees90,000
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)8.18
Shares Outstanding491,131,130
10 Day Avg. Volume1,959,441
30 Day Avg. Volume2,127,608
Financial Highlights & Ratios
PEG Ratio3.34
Price to Book (P/B)N/A
Price to Sales (P/S)4.81
Price to Cash Flow (P/CF)15.00
P/FCF Ratio15.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$235.15Price Target Upside-1.11% Downside
Rating ConsensusHold
Number of Analyst Covering13
Marsh & Mclennan Companies Business Overview & Revenue Model
Company DescriptionMarsh & McLennan Companies, Inc. is a professional services company offering risk consulting, risk and insurance services, and employee benefits consulting services to clients worldwide. Under its Marsh and Guy Carpenter brands, it offers risk management, insurance and reinsurance broking and services. The Consulting division involves offering specialized management, economic and brand consulting services, andhealth, wealth & career services & products. The business unit runs under the Mercer and Oliver Wyman Group brands.
How the Company Makes MoneyMarsh & McLennan Companies generate revenue through a diversified business model encompassing risk management, consulting, and insurance services. The primary revenue streams include insurance brokerage commissions and fees through Marsh, consultancy fees from Mercer, reinsurance brokerage and advisory fees from Guy Carpenter, and management consulting fees from Oliver Wyman. The company's earnings are bolstered by significant partnerships with insurance carriers, global corporations, and governmental bodies, which rely on MMC's expertise to manage risk, optimize strategies, and improve organizational performance. Additionally, MMC benefits from a broad geographic presence, enabling it to capture revenue from various markets around the world.
Marsh & Mclennan Companies Financial Statement Overview
Summary
Marsh & McLennan Companies demonstrate strong financial performance with consistent revenue growth, high profitability, and solid cash flow generation. The income statement reflects significant growth and profitability metrics, although the balance sheet shows a moderate debt level that should be monitored.Income Statement
Marsh & McLennan Companies show a strong income statement with consistent revenue growth; 7.5% from 2023 to 2024. The firm maintains robust profitability with a 23.8% EBIT margin and a commendable net profit margin of 16.6% in 2024. This indicates efficient management and cost control. The gross profit margin at 100% suggests the firm fully captures its sales as profit, typical for service-based businesses. Overall, the income statement reflects impressive growth and profitability metrics, making it a strong performer in the industry.85
Very Positive
Balance Sheet
The balance sheet displays a moderate debt-to-equity ratio of 1.62, indicating a balanced use of debt and equity, although slightly higher than industry norms. The equity ratio is 25.6%, showing a healthy portion of assets financed by shareholder equity. The return on equity (ROE) is strong at 30%, reflecting effective usage of equity capital. However, the significant total debt level poses a potential risk if not managed properly, especially in volatile market conditions.75
Positive
Cash Flow
The cash flow statement is robust with a healthy free cash flow growth of 3.7% from 2023 to 2024, demonstrating the firm's ability to generate cash to support operations and growth initiatives. The operating cash flow to net income ratio of 1.06 indicates efficient conversion of income into cash. The free cash flow to net income ratio is similarly strong at 0.98, supporting the firm's capacity to fund dividends and investments. Overall, cash flow performance is solid, with a slight increase in free cash flow year-over-year.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 24.46B | 22.74B | 20.72B | 19.82B | 17.22B | Gross Profit |
| 24.46B | 9.64B | 8.65B | 8.39B | 7.09B | EBIT |
| 5.82B | 5.28B | 4.28B | 4.31B | 3.07B | EBITDA |
| 6.93B | 6.32B | 5.69B | 5.50B | 4.06B | Net Income Common Stockholders |
| 4.06B | 3.76B | 3.05B | 3.14B | 2.02B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.40B | 3.36B | 1.44B | 1.75B | 2.09B | Total Assets |
| 56.48B | 48.03B | 33.45B | 34.39B | 33.03B | Total Debt |
| 21.86B | 15.44B | 13.47B | 13.16B | 13.58B | Net Debt |
| 19.46B | 12.08B | 12.03B | 11.41B | 11.49B | Total Liabilities |
| 42.95B | 35.66B | 22.70B | 23.17B | 23.77B | Stockholders Equity |
| 13.54B | 12.19B | 10.75B | 11.22B | 9.26B |
| Cash Flow | Free Cash Flow | |||
| 3.99B | 3.84B | 3.00B | 3.11B | 3.03B | Operating Cash Flow |
| 4.30B | 4.26B | 3.46B | 3.52B | 3.38B | Investing Cash Flow |
| -8.82B | -1.42B | -850.00M | -1.16B | -814.00M | Financing Cash Flow |
| 4.46B | -1.12B | -1.05B | -1.30B | -925.00M |
Marsh & Mclennan Companies Technical Analysis
Positive
237.80
Price Trends
221.14
Positive
221.80
Positive
219.05
Positive
Market Momentum
4.51
Negative
67.22
Neutral
75.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MMC, the sentiment is Positive. The current price of 237.8 is above the 20-day moving average (MA) of 231.54, above the 50-day MA of 221.14, and above the 200-day MA of 219.05, indicating a bullish trend. The MACD of 4.51 indicates Negative momentum. The RSI at 67.22 is Neutral, neither overbought nor oversold. The STOCH value of 75.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MMC.
Marsh & Mclennan Companies Risk Analysis
Marsh & Mclennan Companies disclosed 33 risk factors in its most recent earnings report. Marsh & Mclennan Companies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Marsh & Mclennan Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $85.90B | 51.88 | 7.25% | 0.71% | 15.21% | 46.99% | |
77 Outperform | $34.07B | 34.50 | 15.43% | 0.47% | 12.89% | 13.50% | |
76 Outperform | $116.29B | 28.93 | 30.00% | 1.33% | 7.60% | 8.66% | |
73 Outperform | $87.41B | 32.40 | 100.25% | 0.67% | 17.51% | 1.31% | |
72 Outperform | $1.91B | 26.41 | 5.29% | 2.83% | 10.33% | 137.93% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
MMC
Marsh & Mclennan Companies
237.80
37.12
18.50%
AON
Aon
404.07
89.55
28.47%
AJG
Arthur J Gallagher & Co
340.79
93.76
37.95%
BRO
Brown & Brown
119.59
34.96
41.31%
STC
Stewart Information Services
70.73
9.74
15.97%
Marsh & Mclennan Companies Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 8.83% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance for Marsh McLennan in 2024, marked by record revenue and significant acquisitions. However, challenges such as the impact of the California wildfires and a decline in fiduciary income posed concerns. Despite these issues, the company demonstrated resilience and strategic growth, leading to a cautiously optimistic outlook for 2025.Highlights
Record Year for Revenue and Growth
Total revenue grew 8% to $24.5 billion with 7% underlying revenue growth. Adjusted operating income grew 11% to $6.2 billion, with a 10% increase in adjusted EPS.
Largest Year of Acquisitions
Invested $9.4 billion in acquisitions, marking the largest year in Marsh McLennan's history. Notable acquisition includes McGriff for $7.75 billion.
Strong Performance in Risk and Insurance Services
Fourth quarter revenue in Risk and Insurance Services increased 11%, with an 8% underlying growth.
Consulting Growth
Fourth quarter consulting revenue up 6% on a GAAP and underlying basis. Full year consulting revenue was $9.1 billion with underlying growth of 6%.
Lowlights
Impact of California Wildfires
Insured losses from the California wildfires expected to exceed $30 billion, potentially impacting the insurance market.
Fiduciary Income Decline
Fiduciary income was $112 million in the quarter, a decline of $26 million from the third quarter.
Fourth Quarter Margin Concerns
Fourth quarter margin was flat overall, impacted by foreign exchange and acquisitions/divestitures.
Company Guidance
During the call, Marsh McLennan provided guidance for 2025, emphasizing expectations for mid-single-digit underlying revenue growth, margin expansion, and solid growth in adjusted EPS. In 2024, the company achieved notable financial metrics, including an 8% increase in total revenue to $24.5 billion and an 11% rise in adjusted operating income to $6.2 billion. The adjusted operating margin expanded by 80 basis points, marking the 17th consecutive year of reported margin expansion, while adjusted EPS grew by 10%. The company also highlighted a record year of capital deployment, with $9.4 billion invested in acquisitions, including the $7.75 billion acquisition of McGriff. For 2025, Marsh McLennan anticipates continued growth despite expected headwinds from fiduciary income and foreign exchange impacts, with a focus on maintaining financial flexibility and executing its growth strategy.Marsh & Mclennan Companies Corporate Events
M&A TransactionsBusiness Operations and Strategy
Marsh & McLennan Expands with McGriff Acquisition
Positive
Nov 15, 2024
Marsh McLennan, a global leader in risk and strategy, has successfully acquired McGriff Insurance Services, enhancing its capabilities in the middle market. This acquisition, valued at $7.75 billion, brings over 3,500 McGriff employees under Marsh McLennan Agency, promising expanded resources and innovative solutions for clients. This move is set to strengthen Marsh McLennan’s value proposition and deliver superior client services across the U.S.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.