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Why Investors Loved Marsh McLennan's Q1 Earnings

By Dave Kovaleski - Updated Apr 27, 2021 at 3:22PM

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The insurance and consulting firm is one of today's biggest movers

Marsh McLennan (MMC 0.77%), an insurance and consulting firm, saw a major surge in its stock price Tuesday following the release of a strong first-quarter earnings report. The stock price shot up about 4% in early trading and is up about 13% year to date.

There's a lot to like about a 9% increase in revenue year over year to $5.1 billion, a 30% spike in net income to $983 million, and earnings of $1.93 per share (which obliterated estimates).

A business woman looking out the window, smiling.

Image source: Getty Images.

The company provides a range of insurance, financial, and professional services through its four businesses: Marsh, Guy Carpenter, Mercer, and Oliver Wyman. It posted $1.4 billion in operating income with an operating margin of 27%, and saw gains across the board.

Marsh and Guy Carpenter operate in the insurance industry with Marsh being an insurance broker and risk management consultant and Guy Carpenter offering reinsurance and risk services. Mercer is an asset manager; Oliver Wyman is a management consulting firm.

Marsh is the largest business line, with 45% of the company's total revenue. It saw a 13% jump in sales in the first quarter. Mercer, which generates 25% of revenue, saw sales jump 3%. The biggest gainer was Oliver Wyman, which saw revenue rise 14% year over year, while Guy Carpenter had an 8% increase.

Marsh McLennan bought back 1 million shares of its stock for $112 million in the first quarter. It also declared a $0.46 per share quarterly dividend, and was able to reduce its long-term debt by 5%.

In April, the Marsh insurance subsidiary bought PayneWest Insurance, a company based in Montana, to extend its geographic footprint.

Marsh McLennan was among the biggest movers on Tuesday. The stock appears a bit overvalued with a price-to-earnings ratio of 32, but the forward P/E is in a more comfortable 24 range, and investors are clearly pleased with its first-quarter performance.

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Marsh & McLennan Companies, Inc. Stock Quote
Marsh & McLennan Companies, Inc.
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