Two months since its last rise, shares of Marsh & McLennan Cos. (MMC) scaled a new 52-week high of $53.57 on Sep 18, treading a steady growth path. The company’s strong competitive position, led by steady organic growth and healthy capital, is driving the share price of this Zacks Rank #3 (Hold) stock to new horizons.
Notably, this insurance and brokerage service provider’s shares have appreciated 13.9% since the beginning of 2014. Yesterday’s closing price represents a robust one-year return of about 26.1% against 19.2% clocked by the S&P 500 index. Average volume of shares traded over the last three months stands at approximately 1,838.5K.
Earnings Review
Marsh & McLennan has delivered positive earnings surprises in two of the last four quarters while posting breakeven results in the remaining two, with an average beat of 3.6%.
On Jul 29, the company reported second-quarter 2014 operating earnings per share of 79 cents, which outpaced the Zacks Consensus Estimate by 5.3% and the year-ago quarter figure by 9.7%.
Results reflected improved revenues across both consulting and insurance brokerage operations. Though the company’s expenses were higher, its adjusted operating margins witnessed improvement.
Rationale
Marsh & McLennan has a strong cash and capital position. Although its debt levels remains elevated, the company’s prudent enterprise management ensures that this is utilized to generate optimum returns and enhance operating leverage. Successful integration and growth from numerous acquisitions also reflect lowered risk from leverage, thereby helping the stock to buoy up market sentiment.
Moreover, despite higher debt, Marsh & McLennan sanctioned a new share repurchase program worth $2.0 billion and hiked its regular dividend by 15% in May this year. It also bought back stock worth $250 million in the second quarter. These factors are further boosting the confidence of shareholders.
Meanwhile, the long-term growth rate of Marsh & McLennan is pegged at 12.4%, higher than the peer group’s average of 10.9%.
Investors interested in the financial sector could also consider stocks like AmTrust Financial Services Inc. (AFSI),National General Holdings Corp. (NGHC) and Mercury General Corp. (MCY), all of which sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment