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Marsh & McLennan (MMC) to Post Q1 Earnings: What's in Store?

Marsh & McLennan Companies, Inc. MMC is scheduled to release first-quarter 2021 results on Apr 27, before the market opens.

Q1 Estimates

The Zacks Consensus Estimate for the company’s first-quarter earnings per share is pegged at $1.70, suggesting growth of 3.7% from the prior-year quarter. The consensus mark for revenues stands at $4.8 billion, which indicates an improvement of 3.5% from the year-ago reported number.

Factors to Note

The company’s first-quarter revenues are likely to reflect the benefit of continuous rate increases across the commercial property and casualty (P&C) insurance and reinsurance markets. Strong performance at the company’s Risk and Insurance Services segment might have favored the to-be-reported quarter’s top line.

Performance at the Risk and Insurance Services segment may have gained from strong revenues at its Marsh and Guy Carpenter units. While the U.S. and Canada division may have favored Marsh’s performance in the first quarter, Guy Carpenter’s performance is likely to have gained from new business generation, and rise in business renewals. However, fall in fiduciary interest income is likely to have partly offset the segment’s performance in the to-be-reported quarter.

The Zacks Consensus Estimate for the company’s Risk and Insurance Services segment’s revenues is pegged at $3.1 billion, which indicates an improvement of 4.9% from the prior-year quarter. The consensus estimate for Marsh and Guy Carpenter revenues stands at $2.2 billion and $874 million, suggesting growth of 5.2% and 5.7%, respectively, from the year-ago quarter’s reported figures.

However, the adverse impact of COVID-19 pandemic on the more discretionary part of the Consulting segment’s revenues are likely to have weighed on Marsh & McLennan’s performance in the to-be-reported quarter. The Zacks Consensus Estimate for revenues from the Consulting segment is pegged at $1.8 billion, which suggests a 0.3% drop from the prior-year quarter’s reported figure. Per the last earnings call, management expects continued pressure on the company’s consulting business in the first quarter as well.

Performance of the Consulting segment is likely to reflect weak results in its Mercer unit. The consensus estimate for the unit’s revenues stands at $1.2 billion suggesting a decline of 0.6% from the prior-year quarter’s reported number. Nevertheless, new business generation might have driven revenues at another Consulting segment unit named Oliver Wyman in the first quarter. Likewise, the consensus mark for Oliver Wyman’s revenues is pegged at $513 million, which suggests 0.4% growth from the year-ago quarter.

Moreover, the company’s disciplined expense management efforts are likely to result in substantial cost savings. This, in turn, might get reflected in the first-quarter margins.

However, expenses are likely to have remained elevated in the to-be-reported quarter due to strategic hiring, costs related to employee related activity and constant investments to roll out digital technologies.

Management also forecasts interest expense of around $119 million in the first quarter.

Earnings Surprise History

The company boasts of an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 9.03%. This is depicted in the chart below:

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.

Earnings ESP: Marsh & McLennan has an Earnings ESP of +0.44%. This is because the Most Accurate Estimate of $1.71 is pegged higher than the Zacks Consensus Estimate of $1.70. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marsh & McLennan carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Some other stocks worth considering from the finance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Virtu Financial, Inc. VIRT has an Earnings ESP of +3.26% and a Zacks Rank of 2 at present.

Owl Rock Capital Corporation ORCC has an Earnings ESP of +1.75% and a Zacks Rank #3, currently.

Aon plc AON has an Earnings ESP of +0.79% and a Zacks Rank #3.

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Marsh & McLennan Companies, Inc. (MMC): Free Stock Analysis Report
 
Aon plc (AON): Free Stock Analysis Report
 
Owl Rock Capital Corporation (ORCC): Free Stock Analysis Report
 
Virtu Financial, Inc. (VIRT): Free Stock Analysis Report
 
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