Let’s talk about the popular Marsh & McLennan Companies, Inc. (NYSE:MMC). The company’s shares received a lot of attention from a substantial price increase on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Marsh & McLennan Companies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What’s the opportunity in Marsh & McLennan Companies?
According to my valuation model, Marsh & McLennan Companies seems to be fairly priced at around 16.19% above my intrinsic value, which means if you buy Marsh & McLennan Companies today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $90.83, there’s only an insignificant downside when the price falls to its real value. Furthermore, Marsh & McLennan Companies’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Marsh & McLennan Companies?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 44% over the next couple of years, the future seems bright for Marsh & McLennan Companies. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in MMC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on MMC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Marsh & McLennan Companies. You can find everything you need to know about Marsh & McLennan Companies in the latest infographic research report. If you are no longer interested in Marsh & McLennan Companies, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.