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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Marsh & Mclennan Companies, Inc. (XNYS:MMC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MMC
Name:
MARSH & MCLENNAN COMPANIES, INC. (XNYS:MMC)
Sector:
- 824000.00K
Industry:
Insurance Brokers
CEO:
Mr. Daniel Glaser
Total Employees:
83,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -1.34% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MARSH & MCLENNAN COMPANIES, INC.(MMC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INSURANCE BROKERS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
160.27
One Month Price Target:
$161.06
Six Month Price Target :
$165.04
Likely Price in One Year's Time:
Ticker:
$169.81
Likely Trading Range Today Under (Normal Volatility)
$159.92
Price Upper limit ($) :
$160.85
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$154.71
This week:
$147.84
This month :
$135.42
Other Primary facts
Market Cap:
80.63B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
499.02M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.35%
-12.07%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$186.03
$174.07
$134.51
$146.47
Medium risk (<10%) entry points
Buy Call
Sell Call
$170.17
Buy Put:
Sell Put:
$167.61
$150.34
$152.93
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MMC
Sharpe Ratio:
3.61%
Comparison:
MMC, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 55.47% higher than the industry
& ratio is 58.38% higher than the market/S&P 500 average
Average Returns/Yield of
MMC
Daily returns:
0.07%
Weekly returns:
0.36%
Monthly returns:
1.42%
Yearly returns:
6.97%
Comparison of returns:
Average annual returns/yield (last 3 years) is 144.49% above industry average
Classification:
MMC, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.92
Statistical test of Returns:
MMC has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.72%
Weekly Volatility:
3.85%
Monthly Volatility:
7.71%
Yearly Volatility:
26.69%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.95%
Volatility in last five trading days has been -44.61% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.47%
Weekly VaR:
-7.75%
Monthly VaR:
-15.51%
How Much Can the price of
MMC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-13%
Worst case (decline):
-53.72%
This translates to price declining to:
$139.60
This translates to price declining to:
$74.18
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
MMC is a 9.45% riskier investment compared to the market/S&P 500 & is -6.24% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is -32.57% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MMC
Beta in relation to market/S&P 500--0.89
Expected beta in 1 year's time:
0.676
Expected beta in 3 year's time:
0.956
Unlevered (debt free) Beta:
0.477
Beta in relation to Nasdaq (XNAS):
0.647
Beta in relation to all global stocks::
0.625
Beta Comparison & Analysis
Beta of competitors/peers::
1.058
Beta is -16.29% lower than peers
Average Industry Beta:
0.675
Beta is 31.21% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
20.74%
Sustainable growth rate is 68.13% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.078
Alpha is -1080.48% below industry average alpha yield
Alpha is 499% higher than market/& is unsustainably high
Analysis of Cost of Capital of
MMC
Equity cost of capital:
0.092
Equity cost of capital is 18.56% above industry mean WACC
Unlevered (without debt) cost of capital:
4.96%
Before-tax cost of debt:
3.14%
After-tax cost of debt:
2.48%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.48%
WACC is 1.33% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$40.65
Revenue growth rate per share of (3Y):
7.17
Annual revenue growth rate is -79.35% below industry average
EPS:
$6.31
Expected Annual growth rate of EPS (3Y):
21.24%
Expected future EPS growth rate is 25.67% higher than the Insurance Brokers industry
Free cash flow (FCF) per share:
$5.45
Balance sheet equity growth per share: 27.14%
Equity growth rate per share is -71684.00% lower than the industry
Debt per share
$24.81
EBITDA per share
$10.91
Valuation Analysis Today of
MMC
P/E Ratio:
24.18
P/E Ratio of Competitors/Peers:
14.56
P/E ratio is 66.11% higher than main peers & is -55.57% lower than the industry
Stock price/value with industry average P/E ratio: $343.47
MMC is -53.34% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $43.61
Present value of the expected future dividends only: $29.08
P/S (Price to Sales ratio):
3.94
Price to sales ratio is 24.10% above the industry mean
P/B (Price to book value ratio):
7.17
Price to free cash flow: 29.40
-
Net income growth rate (3Y):
90.48%
Net income growth rate is -103.19% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 8.42%
Dividend yeild: 1.34%
Previous Dividend: $0.54
Previous adjusted dividend: $0.54
Previous Dividend: $2.14
Expected next dividend best case: $0.57
Expected next dividend worst case: $0.50
Average dividend payment (long-term): $0.49
Average dividend increase/decrease (growth rate) % per period: 1.73%
Expected next dividend payment date: 08/11/2022
Expected next dividend record date: 07/05/2022
Expected next dividend declaration date: 21/06/2022
Previous dividend payment date: 13/05/2022
Previous dividend record date: 04/06/2022
Previous dividend declaration date: 23/03/2022
Dividend History:
2022-04-05--$0.54
2021-10-07--$0.54
2021-04-06--$0.47
2022-01-26--$0.54
2021-07-28--$0.54
2021-01-29--$0.47
Dividend growth rate is -112.66% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
113.22%
Net debt to equity ratio:
120.08%
Debt to assets ratio:
36.76%
Net debt to assets ratio:
38.98%
Debt-to-asset ratio is -25.07% below industry average
Ability to repay debt:
Interest coverage ratio:
12.49
Interest coverage ratio is 112.03% more than industry average
Looking forward:
Debt growth rate:
-3.07%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.03%
Analysis of Key Statistics
Correlation of price movement with the market:
0.78
Statistical significance of correlation:
MMC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.616
Stock price is 26.68% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.616
Correlation of price movement with Nasdaq (^IXIC):
0.046
Covariance of price movement with the market:
0.046
Kurtosis
12.635
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.188
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MMC
Gross Profit Margin Ratio:
168%
Operating Profit Margin Ratio:
21.68%
Operating profit margin is 180.67% higher than the industry
Net Profit Margin Ratio:
168%
Effective Tax Rate:
24.32%
Effective tax rate is 60.40% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
29.54%
Return on equity (ROE) is 126.60% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
9.59%
Return on assets (ROA) is 73.44% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
1.18
Current ratio is -48.72% below industry average
Cash Conversion Cycle (days):
1.8
Cash conversion cycle is -99.63% below industry average
The remaining useful life of property plant & equipment is: 12.3 years
Stock based compensation to net income ratio:
3.25%
In-depth Efficiency Analysis
Revenue generated per employee:
244.4K
Each employee generates -6% less revenue than industry average revenue per employee
EBITDA generated per employee:
65.6K
Each employee generates 74% more EBITDA than industry average revenue per employee
Profit generated per employee:
38.9K
Each employee generates 90% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 9.9K
Each employee generates -303% less free cash flow than industry average revenue per employee
Assets/Capital per employee
312.0K
Each employee generates -303% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
MMC
Blackstone Inc (XNYS:BX)
USB-PP
Mitsubishi UFJ Financial Group, Inc. (XNYS:MUFG)
Truist Financial Corporation (XNYS:TFC)
THE BANK OF NOVA SCOTIA (XNYS:BNS)
Brookfield Asset Management Inc. (XNYS:BAM)
ICICI BANK LIMITED (XNYS:IBN)
INTERCONTINENTAL EXCHANGE, INC. (XNYS:ICE)
U.S. BANCORP (XNYS:USB)
Current Analyst Ratings
Strong buy�17%
Buy�29%
Hold�33%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
20.29B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
11.72B
8.57B
-
-
-
-
4.17B
4.17B
3.00M
436.00M
730.00M
5.45B
4.40B
3.23B
4.31B
1.05B
3.23B
Statement of Cash Flow
Date:
Period:
180.00M
Differed Income Tax :
144.00M
Stock Based Compensation :
105.00M
Change in Working Capital :
- 2191000.00K
Accounts Receivables:
-
Other Working Capital:
- 1528000.00K
Other Non-Cash Items:
- 26000.00K
Net Cash Provided by Operating Activities:
- 702000.00K
Investments in PP&E:
-
Net Acquisitions:
- 28000.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
772.00M
-
772.00M
5.96B
-
1.05B
7.79B
2.69B
16.25B
2.72B
-
530.00M
3.71B
25.90B
-
33.69B
3.08B
1.52B
308.00M
-
1.98B
6.59B
12.38B
3.56B
15.95B
-
22.53B
561.00M
18.92B
- 4679000.0K
- 3861000.00K
March 31, 2022 at 6:00:00 AM
15.89B
10.94B
33.47B
-
13.91B
13.1B
-
- 131000.00K
- 159000.00K
- 4000.00K
34.00M
- 634000.00K
- 272000.00K
1.73B
855.00M
- 136000.00K
- 142000.00K
11.23B
11.38B
- 702000.00K
- 122000.00K
- 824000.00K
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
MMC
2023
2024
2025
2026
2027
$180.23
$190.95
$202.32
$214.36
$227.11