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What's in Store for Marsh & McLennan (MMC) in Q2 Earnings?

Marsh & McLennan Companies, Inc. MMC is scheduled to report second-quarter 2017 earnings results on Jul 27, before the opening bell.

Last quarter, Marsh & McLennan surpassed the Zacks Consensus Estimate by 9.09%. Moreover, the company beat earnings estimates in two out of the last four quarters, with an average positive surprise of 3.76%.

Let’s see how things are shaping up for this announcement

Factors Influencing Q2 Results

We expect the company’s second-quarter’s results to showcase strong performance at both its segments — Risk and Insurance Services and Consulting — driven by an improving global economy which is perking up economic activity. However, the company commented that given the better-than-expected first-quarter top line, growth might get tempered in the second quarter, resulting in modest margin improvement in Risk and Insurance Services.

The company is quite aggressive in making acquisitions, which constitutes an important part of its capital allocation strategy. The synergistic effect of a number of purchases made by the company over the past many quarters will lead to revenue accretion.

Growth initiatives undertaken by the company will contribute to overall results. Some of these include –  expansion in Latin America, Asia, the Middle East and South Africa, Marsh’s buildout of MMA and its UK SME strategy, the emergence of cyber, flood and mortgage practices at Marsh and Guy Carpenter, investments at Mercer in Workday implementation capabilities, global health and benefits technology and the Mercer Marketplace Health Exchange, investments in Oliver Wyman and their digital technology and analytics platform, and the pursuit of high-growth areas, including healthcare and public sector.

The company has undertaken restructuring initiatives which will cause it to incur related charges.

Also, foreign exchange movement might have a slight negative impact on earnings.

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 the Most Accurate estimate of $1.00 per share is in line the Zacks Consensus Estimate. 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 #4 (Sell). 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:  

Fiserv, Inc. FISV is expected to report second-quarter earnings results on Aug 1. It has an Earnings ESP of +1.63% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CNA Financial Corp. CNA has an Earnings ESP of +4.00% and a Zacks Rank #3. The company will report second-quarter earnings results on Jul 31.

Financial Engines, Inc. FNGN has an Earnings ESP of +4.00% and a Zacks Rank #2. It will report second-quarter earnings results on Aug 1.

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