Marsh & McLennan is Trading at a Discount: Should You Buy Now or Wait?

Core Viewpoint - Marsh & McLennan Companies, Inc. (MMC) shares are trading at a discount compared to the Zacks Insurance - Brokerage industry, with a forward price-to-earnings value of 19.49X, lower than its five-year median of 23.09X and the industry average of 19.79X [1] Group 1: Price Performance and Market Position - MMC shares have lost 6.8% year-to-date, while the industry has declined by 16.8%, and the Finance sector and Zacks S&P 500 Composite have gained 13.6% and 13.2%, respectively [4] - The market capitalization of MMC is $97.3 billion, with an average trading volume of 2.4 million shares over the last three months [4] - The average price target for MMC, based on short-term estimates from 19 analysts, is $234.58 per share, indicating a potential upside of 18.5% from the last closing price [11] Group 2: Revenue and Earnings Projections - The Zacks Consensus Estimate for MMC's 2025 revenues is $27 billion, reflecting a year-over-year improvement of 10.4% [9] - The consensus estimate for current-year earnings is $9.57 per share, up 8.8% from the previous year [9] - Projections for 2026 earnings per share and revenues indicate increases of 8.3% and 5.4%, respectively, from 2025 estimates [9] Group 3: Operational Strengths and Growth Drivers - MMC targets mid-single-digit underlying revenue growth in 2025, with strong results from the Risk and Insurance Services segment being the largest revenue contributor [8][16] - The company has consistently delivered favorable operating results, supported by product innovations and entry into new markets [14][15] - Return on equity for the trailing 12 months is 31.9%, outperforming the industry average of 25.5% [13] Group 4: Challenges and Financial Management - Rising compensation costs are impacting margins, with operating expenses increasing by 11.8% in the first half of 2025 [18] - As of June 2025, MMC carries $19 billion in debt, with a debt-to-capital ratio of 55.3%, above the industry average of 50.1% [19] - The company has raised dividends five times over the past five years, achieving an annualized growth rate of 14.5% with a current payout ratio of 35% [17]