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Marsh & McLennan (MMC): Will it Disappoint in Q4 Earnings?

Marsh & McLennan Companies, Inc.MMC is scheduled to report fourth-quarter and full-year 2016 results on Feb 2, before the opening bell.

Last quarter, Marsh & McLennan reported in line with the Zacks Consensus Estimate. Let's see how things are shaping up for this announcement.

Marsh & McLennan Companies, Inc. Price and EPS Surprise

Marsh & McLennan Companies, Inc. Price and EPS Surprise | Marsh & McLennan Companies, Inc. Quote

Factors to Influence Q4 Results

Marsh & McLennan earnings are expected to see accretion from significant investments for growth over many years, both organic and through acquisitions.

The company's revenues have been growing consistently for the past many quarters and we expect the trend to continue in the fourth quarter. Revenues will see an upside from the company's vast geographical footprint. Both its segments - Risk & Insurance Services and Consulting - are expected to contribute to the growth.

In the fourth quarter, the company expects Oliver Wyman's revenue growth to be relatively flat with last year. Revenues from the unit declined last quarter due to comparisons to robust growth in the financial services practice last year as well as global growth concerns raised by Brexit uncertainty.

Moreover, disciplined expense management will likely drive margin growth.

The company, however, expects to incur incremental pension expense of a 1 cent per share or so in the fourth quarter. This additional expense will be included in its adjusted earnings per share.

The company's efforts toward returning capital to shareholders through substantial share repurchase will drive bottom-line growth.

Earnings Whispers

Our proven model does not conclusively show that Marsh & McLennan is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Marsh & McLennan has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 69 cents per share. 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 #3 (Hold) which decreases the predictive power of ESP. We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Healthways, Inc. TVTY is expected to report fourth-quarter and full-year 2016 earnings results on Feb 23. The company has an Earnings ESP of +2.86% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Molina Healthcare Inc. MOH has an Earnings ESP of +5.33% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings results on Feb 13.

CVS Health Corporation CVS has an Earnings ESP of +0.60% and a Zacks Rank #3. The company is expected to report fourth-quarter and 2016 earnings results on Feb 9.

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Healthways, Inc. (TVTY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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