MMC - Embedded Expectations Analysis - 2018 10 25
Marsh & McLennan Companies, Inc. (MMC:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 19.7x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain near current peaks, but management has concerns about growth of their Wealth business, tax reform, and the performance of Oliver WymanSpecifically, management may be exaggerating the opportunity they have to increase insurance penetration globally, and may lack confidence in the potential for tailwinds related to ongoing pension reform in India. Moreover, they may have concerns about the provisional report from the U.K. Competition and Markets Authority, and about their DB business. Furthermore, they may lack confidence in their ability to drive revenue growth in Oliver Wyman, and to sustain operating income growth. They may also be concerned about their ability to maintain strong growth in their Wealth business, and about the new guidance from the U.S. Treasury on tax reform. Finally, they may lack confidence in the sustainability of current tax rates, and in their ability to maintain high dividend payment levels
Marsh & McLennan Companies is a holding company. Through its subsidiaries, the company provides clients advice and solutions in risk, strategy and people. The company provides analysis, advice and transactional capabilities to clients. The company conducts business through two segments: Risk and Insurance Services, which includes risk management activities (risk advice, risk transfer and risk control and mitigation solutions) as well as insurance and reinsurance broking and services; and Consulting, which includes health, wealth and career services and products, and other management, economic and brand consulting services.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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