Marsh & Mclennan Companies, Inc. (NYSE: MMC)

Sector: Financial Services Industry: Insurance Brokers CIK: 0000062709
Market Cap 92.62 Bn
P/B 8.41
P/E 29.47
P/S 4.67
ROIC (Qtr) 12.42
Div Yield % 1.63
Rev 1y % (Qtr) 11.48
Total Debt (Qtr) 21.43 Bn
Debt/Equity (Qtr) 1.41

About

Marsh & McLennan Companies, Inc. (MMC), a leading professional services firm, operates primarily in the areas of risk, strategy, and people. The company's main business activities include risk management, insurance broking, consulting services, human resources, benefits consulting, and management consulting. MMC has a global presence, with operations in various countries and regions, including the United States, Canada, the United Kingdom, Europe, India, Middle East, Africa, Latin America, and the Caribbean, Asia, and Pacific. MMC generates revenue...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 14.51B provide 9.10x coverage of short-term debt 1.59B, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 5.09B provides strong 13.04x coverage of stock compensation 390M, indicating sustainable incentive practices.
  • Operating cash flow of 5.09B provides exceptional 68.74x coverage of minority interest expenses 74M, showing strong core operations.
  • Robust free cash flow of 4.83B exceeds capital expenditure of 262M by 18.42x, indicating strong organic growth funding capability.
  • Retained earnings of 26.95B provide full 1.36x coverage of long-term debt 19.83B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 5.09B barely covers its investment activities of (7.97B), with a coverage ratio of -0.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.09B provides thin coverage of dividend payments of (1.66B) with a -3.07 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 14.51B provide limited coverage of acquisition spending of (7.73B), which is -1.88x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Retained earnings of 26.95B provide limited buffer against comprehensive income items of (5.44B), which is -4.95x, indicating elevated exposure to market risks.
  • High financing cash flow of 3.69B relative to working capital of 2.60B, which is 1.42x suggests concerning dependence on external funding for operational needs.

Geographical Breakdown of Revenue (2024)

Subsegments Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance Brokers
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MMC Marsh & Mclennan Companies, Inc. 92.62 Bn 29.47 4.67 21.43 Bn
2 AON Aon plc 74.51 Bn 27.41 4.38 17.44 Bn
3 AJG Arthur J. Gallagher & Co. 55.76 Bn 51.09 5.25 13.69 Bn
4 BRO Brown & Brown, Inc. 22.82 Bn 108.30 13.93 7.97 Bn
5 WTW Willis Towers Watson Plc 22.12 Bn 46.77 5.80 5.91 Bn
6 ERIE Erie Indemnity Co 13.10 Bn 45.46 4.72 0.00 Bn
7 CRVL Corvel Corp 3.53 Bn 33.49 3.78 0.02 Bn
8 ARX Accelerant Holdings 2.62 Bn 96.44 4.35 0.12 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.77 0.83
EV to Cash from Ops. EV/CFO 29.64 26.54
EV to Debt EV to Debt 4.86 10.83
EV to EBIT EV/EBIT 22.55 15.57
EV to EBITDA EV/EBITDA 19.35 12.32
EV to Free Cash Flow [EV/FCF] EV/FCF 33.51 38.93
EV to Market Cap EV to Market Cap 1.13 -1,866.90
EV to Revenue EV/Rev 5.26 2.59
Price to Book Value [P/B] P/B 8.41 3.17
Price to Earnings [P/E] P/E 29.47 24.79
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.49 0.83
Dividend Payout Ratio % Div Payout % (Qtr) 39.90 31.35
Dividend per Basic Share Div per Share (Qtr) 2.54 1.08
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 25.80 18.16
Interest Coverage Int. cover (Qtr) 6.67 -4.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 27.22 423.33
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 5.76 -3.76
Dividend Growth (1y) % Div 1y % (Qtr) -16.89 -1.10
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 8.26 -9.09
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 7.87 -5.72
EBIT Growth (1y) % EBIT 1y % (Qtr) 4.73 8.13
EBT Growth (1y) % EBT 1y % (Qtr) -0.88 -4.46
EPS Growth (1y) % EPS 1y % (Qtr) 2.82 -68.33
FCF Growth (1y) % FCF 1y % (Qtr) 28.02 -67.66
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.47 52.95
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.45 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.31 0.16
Cash Ratio Cash Ratio (Qtr) 0.69 0.54
Current Ratio Curr Ratio (Qtr) 1.12 2.11
Debt to Equity Ratio Debt/Equity (Qtr) 1.41 0.93
Interest Cover Ratio Int Coverage (Qtr) 6.67 -4.53
Times Interest Earned Times Interest Earned (Qtr) 6.67 -4.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.50 6.16
EBIT Margin % EBIT Margin % (Qtr) 24.10 -108.04
EBT Margin % EBT Margin % (Qtr) 20.48 -14.94
Gross Margin % Gross Margin % (Qtr) 100.00 53.35
Net Profit Margin % Net Margin % (Qtr) 15.60 -17.46