Marsh & McLennan (MMC) Stock: Q1 2025 Revenue Climbs 9% Despite Margin Pressure

TLDR

Revenue increased 9% YoY to $7.1B with 4% underlying growth.
Adjusted EPS rose 5% to $3.06, boosted by tax benefits.
Adjusted operating income grew 8% to $2.2B.
Risk and Insurance Services revenue climbed 11% to $4.8B.
MMC repurchased $300M in stock and ended Q1 with $1.6B in cash.

Marsh & McLennan Companies Inc. (NYSE: MMC) posted a solid Q1 2025 performance with revenue growing 9% year-over-year to $7.1 billion, buoyed by solid contributions from both the Risk & Insurance and Consulting segments. On an underlying basis, revenue rose 4%, reflecting stable demand for its advisory services.

Despite the strong top-line growth, shares dropped 4.86% to close at $220.07 following the report, largely due to concerns over margin pressure and rising interest expenses.

Marsh & McLennan Companies Inc. (NYSE: MMC)

Earnings and Margin Performance

Adjusted earnings per share came in at $3.06, up 5% from last year. This included a 10-cent benefit from favorable tax items and a 5-cent drag from foreign exchange effects. GAAP EPS declined 1% to $2.79, weighed down by higher interest expenses, which jumped to $245 million from $159 million a year earlier.

Adjusted operating income rose 8% to $2.2 billion, translating to an adjusted operating margin of 31.8%. This represented a 20 basis point decline year-over-year, partly due to seasonality linked to the McGriff acquisition.

Strong Gains in Risk and Insurance Services

The Risk and Insurance Services segment delivered a standout performance, with revenue rising 11% to $4.8 billion. On an underlying basis, the segment grew 4%.

Marsh, the brokerage unit, posted a 15% increase in revenue to $3.5 billion. Underlying revenue rose 5%, with international operations contributing solid growth: 8% in Latin America, 6% in EMEA, and 4% in Asia Pacific.

Reinsurance broker Guy Carpenter brought in $1.2 billion, marking 5% growth both on a GAAP and underlying basis.

Consulting Business Delivers Modest Growth

Revenue from the Consulting segment rose 5% to $2.3 billion, or 4% on an underlying basis. Adjusted operating income increased 8% to $491 million.

Mercer, the HR and investment advisory unit, posted $1.5 billion in revenue, with its Health segment up 7% and Wealth rising 3%. Career services revenue slipped 1%.

Oliver Wyman, the global management consulting arm, contributed $818 million in revenue, up 4% year-over-year.

Capital Allocation and Balance Sheet

Marsh & McLennan returned capital to shareholders with $300 million in share repurchases during Q1. The company also repaid $500 million in senior notes and ended the quarter with a cash balance of $1.6 billion.

For the full year, it expects to deploy $4.5 billion across dividends, share repurchases, and acquisitions.

Caution Flags and Outlook

Despite the positives, a few concerns emerged in the report. Fiduciary income dropped $19 million due to falling interest rates. Global property insurance rates declined by 6%, and overall insurance pricing dropped by 3%, impacting outlook for commission-based revenue.

GuruFocus flagged seven warning signs for MMC, signaling the need for closer scrutiny of valuation and financial health.

Stock Performance and Valuation

While MMC shares fell after the earnings release, the stock has delivered strong returns over time. It’s up 12.99% over the past year and 35.39% over the past three years. The five-year return of 140.29% far exceeds the S&P 500’s 83.77%.

With steady earnings growth, diversified business lines, and strong capital discipline, Marsh & McLennan remains a long-term performer, even as short-term pressures weigh on the stock.

The post Marsh & McLennan (MMC) Stock: Q1 2025 Revenue Climbs 9% Despite Margin Pressure appeared first on CoinCentral.

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