A significant driver of top-line growth: Marsh & McLennan Companies Inc. (MMC)

Marsh & McLennan Companies Inc. (NYSE: MMC) stock fell -0.05% on Friday to $165.31 against a previous-day closing price of $165.39. With 1.63 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.89 million shares. During the session, the Insurance Brokers company that operates in wider Financial sector, reached to the highest price of $166.21 whereas the lowest price it dropped to was $164.75. The 52-week range on MMC shows that it touched its highest point at $183.14 and its lowest point at $142.80 during that stretch. It currently has a 1-year price target of $177.13. With its current market cap of 79.55 billion, MMC has annualized dividend of $2.36 while the current yield stands at 1.43%. Beta for the stock currently stands at 0.90.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of MMC was up-trending over the past week, with a rise of 2.19%, but this was up by 4.88% over a month. Three-month performance surged to 1.14% while six-month performance rose 6.81%. The stock gained 11.03% in the past year, while it has lost -4.90% so far this year. A look at the trailing 12-month EPS for MMC yields 6.63 with Next year EPS estimates of 7.47. For the next quarter, that number is 1.15. This implies an EPS growth rate of 55.60% for this year and 10.18% for next year. EPS is expected to grow by 8.20% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 12.70%.

Float and Shares Shorts:

At present, 501.00 million MMC shares are outstanding with a float of 498.42 million shares on hand for trading. On Jul 14, 2022, short shares totaled 5.3 million, which was 1.06% higher than short shares on Jun 14, 2022. In addition to Mr. Daniel S. Glaser as the firm’s Pres, CEO & Director, Mr. Mark Christopher McGivney serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 92.77% of MMC’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 56.01% of MMC, in contrast to 34.14% held by mutual funds. Shares owned by individuals account for 1.36%. As the largest shareholder in MMC with 8.12% of the stake, The Vanguard Group, Inc. holds 40,766,658 shares worth 40,766,658. A second-largest stockholder of MMC, BlackRock Fund Advisors, holds 25,491,274 shares, controlling over 5.08% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in MMC, holding 23,895,216 shares or 4.76% stake. With a 4.22% stake in MMC, the Washington Mutual Investors Fund is the largest stakeholder. A total of 21,188,999 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.95% of MMC stock, is the second-largest Mutual Fund holder. It holds 14,816,993 shares valued at 2.3 billion. Vanguard 500 Index Fund holds 2.21% of the stake in MMC, owning 11,109,543 shares worth 1.72 billion.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, MMC reported revenue of $5.38B and operating income of $1.36B. Over the past year, revenue came in at $20.65B while operating income stood at $4.54B. It generated $967.00M net income for the quarter, which came to $3.38B over the last twelve months. The EBITDA in the recently reported quarter was $1.59B and diluted EPS was $1.91. EBITDA for the full year was $5.50B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for MMC since 19 analysts follow the stock currently. There are 6 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 8 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 2 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With MMC analysts setting a high price target of $197.00 and a low target of $145.00, the average target price over the next 12 months is $175.73. Based on these targets, MMC could surge 19.17% to reach the target high and fall by -12.29% to reach the target low. Reaching the average price target will result in a growth of 6.3% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. MMC will report FY 2022 earnings on 02/02/2023. Analysts have provided yearly estimates in a range of $6.90 being high and $6.69 being low. For MMC, this leads to a yearly average estimate of $6.77. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Marsh & McLennan Companies Inc. surprised analysts by $0.03 when it reported $1.89 EPS against a consensus estimate of $1.86. The surprise factor in the prior quarter was $0.16. Based on analyst estimates, the high estimate for the next quarter is $1.18 and the low estimate is $1.10. The average estimate for the next quarter is thus $1.15.

Summary of Insider Activity:

Insiders traded MMC stock several times over the past three months with 7 Buys and 2 Sells. In these transactions, 6,428 shares were bought while 74 shares were sold. The number of buy transactions has increased to 31 while that of sell transactions has risen to 28 over the past year. The total number of shares bought during that period was 487,988 while 462,537 shares were sold.

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