Marsh & McLennan Companies: Steady Growth and Strategic Acquisitions Drive Performance

Marsh & McLennan Companies, Inc. (MMC) achieves significant revenue growth bolstered by a strong acquisition strategy, rising rates, and a solid financial position.

Stock Performance and Zacks Ranking

Currently, Marsh & McLennan holds a Zacks Rank of #3 (Hold). Year-to-date, the stock has increased by 8.4%, outperforming the insurance industry, which has gained 7.3%. In contrast, the Zacks Finance sector and the S&P 500 have declined by 7.6% and 14.1% respectively during the same period.

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Positive Earnings Projections

According to the Zacks Consensus Estimate, Marsh & McLennan’s earnings for 2025 are projected to be $9.57 per share, marking an 8.8% increase from 2024. Revenue estimates stand at $26.9 billion, indicating a growth of 9.9% from the previous year. The 2026 earnings consensus is expected to rise to $10.45 per share, reflecting a growth of 9.1%, while revenues are forecasted at $28.4 billion, representing a 5.5% increase from the earlier estimate.

Strong Earnings Surprise Record

Marsh & McLennan maintains a remarkable earnings surprise history, consistently exceeding estimates in the last four quarters with an average surprise rate of 3.13%.

Impressive Return on Equity

The company’s return on equity is currently at 32.6%, which surpasses the industry average of 29.5%. This highlights Marsh & McLennan’s efficiency in leveraging shareholder investments.

Business Advantages and Growth Strategy

Marsh & McLennan’s ongoing revenue momentum is driven by strong performances in both the Risk and Insurance Services and Consulting divisions. Since 2010, the company has seen consistent top-line growth, with the exception of 2015. For 2025, management anticipates underlying revenue growth in the mid-single digits.

The Risk and Insurance Services segment is thriving, supported by strong new business generation and increasing renewal rates, along with favorable pricing trends in both insurance and reinsurance, aided by a growing global economy. Throughout 2024, the segment completed 10 acquisitions, including notable firms like Fisher Brown Bottrell Insurance and AmeriStar Agency.

Meanwhile, the Consulting division remains robust, propelled by sustained demand for health, wealth, and career advisory services, also bolstered by seven strategic acquisitions in the same timeframe.

Marsh & McLennan is committed to an ongoing acquisition strategy, regularly pursuing opportunities to enhance its global footprint and service offerings. In 2024 alone, the company invested $8.5 billion in acquisitions, with a notable purchase being Arthur Hall Insurance from Pennsylvania, which specializes in commercial and personal insurance services.

Supporting its growth initiatives, Marsh & McLennan benefits from strong cash reserves and robust cash flow, enabling the company to pursue strategic investments while returning value to shareholders through dividends and share repurchases. The current dividend yield is 1.4%, surpassing the industry average of 1%.

Key Risks for Investors

Despite its strengths, Marsh & McLennan faces risks. Operating expenses have steadily increased, with a 6.8% rise in 2024 mainly attributed to higher salaries and incentives. Long-term debt also escalated from $11.8 billion in 2023 to $19.4 billion by the end of 2024, increasing interest expenses by 21.1% during the same period. Management estimates interest expenses will be around $246 million for the first quarter of 2025. Rising costs and an increasing debt load could pressure profit margins moving forward.

Stocks for Consideration

Investors may also consider other well-rated stocks in the insurance sector, such as EverQuote, Inc. (EVER), Brown & Brown, Inc. (BRO), and The Progressive Corporation (PGR). While EverQuote holds a Zacks Rank of #1 (Strong Buy), both Brown & Brown and Progressive currently carry a Zacks Rank of #2 (Buy). For a complete list of Zacks #1 Rank stocks, visit here.

EverQuote has consistently exceeded earnings estimates over the last four quarters, with an average surprise of 160.73%. The Zacks Consensus Estimate for EVER’s earnings in 2025 reflects a 36.4% increase, while revenues are projected to rise by 25.2% compared to the prior year.

The consensus for EverQuote’s earnings has risen by 6.2% over the past 30 days, with shares up 8.4% year-to-date.

Brown & Brown has also beaten earnings estimates in the last four quarters, averaging an 8.18% surprise. The consensus for BRO’s 2025 earnings indicates a 9.1% climb, with revenues expected to grow by 8.4% year-over-year.

Earnings estimates for BRO have improved by 0.2% in the last month, and the stock has gained 10.6% year-to-date.

Progressive’s earnings have outperformed expectations in each of the last four quarters, with an average surprise of 18.49%. The Zacks Consensus Estimate for PGR’s 2025 earnings indicates a 9.8% increase, while expected revenues show a 16.1% rise from the previous year.

The consensus estimate for PGR’s earnings has increased by 0.6% over the past month, with shares rising 7% year-to-date.

Insight from Zacks’ Research Team

Zacks’ experts have identified five stocks with high potential for gain, specifically highlighting one stock as most likely to double. This leading pick is part of a rapidly growing financial firm with over 50 million customers and a diverse range of innovative solutions. While not all chosen stocks may succeed, this selection could significantly outperform previous high-performing Zacks selections, including Nano-X Imaging, which increased by 129.6% in under nine months.