Will High Costs Weigh on Marsh & McLennan's (MMC) Q2 Earnings?

Core Viewpoint - Marsh & McLennan Companies, Inc. (MMC) is expected to report its second-quarter 2024 results on July 18, with earnings per share (EPS) estimated at $2.39, reflecting an 8.6% increase from the previous year's $2.20 [1][2]. Financial Performance Expectations - The Zacks Consensus Estimate for revenues is projected at $6.3 billion, indicating a 6.9% rise from the prior year's figure [2]. - The Risk and Insurance Services segment is anticipated to see a revenue increase of 7.2% from $3.7 billion in the prior year, with adjusted operating income expected to rise by 7.2% from $1.2 billion [8]. - The Consulting segment is expected to grow approximately 5.8% from $2.2 billion, with Oliver Wyman's revenues projected to increase by 7.5% year-over-year [9][10]. Segment Performance Drivers - Strong performance in the Risk and Insurance Services and Consulting segments is expected to drive overall revenue growth, supported by new business growth and a favorable renewal environment [6][7]. - The Wealth and Health operations within the Mercer sub-unit are likely to benefit from positive net flows and improving assets under management, contributing to the overall growth [10]. Challenges and Considerations - Higher operating expenses are projected to increase by 4.5% year-over-year, which may impact overall profitability [11]. - Factors such as decreasing rates in workers' compensation and declining cyber pricing could negatively affect the second-quarter results [11]. Stock Performance - Marsh & McLennan's stock has increased by 15.7% year-to-date, outperforming the industry growth of 13.8% and the sector's increase of 9.2%, but underperforming the S&P 500 index, which rose by 18.2% [12]. Conclusion - Despite the anticipated strong segment performances and strategic acquisitions, rising expenses and inflation necessitate close monitoring of the upcoming earnings results [13].