If EPS Growth Is Important To You, Marsh & McLennan Companies (NYSE:MMC) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Marsh & McLennan Companies (NYSE:MMC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Marsh & McLennan Companies with the means to add long-term value to shareholders.

Check out our latest analysis for Marsh & McLennan Companies

Marsh & McLennan Companies' Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. It certainly is nice to see that Marsh & McLennan Companies has managed to grow EPS by 32% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Marsh & McLennan Companies maintained stable EBIT margins over the last year, all while growing revenue 12% to US$21b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Marsh & McLennan Companies' forecast profits?

Are Marsh & McLennan Companies Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$86b company like Marsh & McLennan Companies. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth US$208m. This comes in at 0.2% of shares in the company, which is a fair amount of a business of this size. This should still be a great incentive for management to maximise shareholder value.

Does Marsh & McLennan Companies Deserve A Spot On Your Watchlist?

For growth investors, Marsh & McLennan Companies' raw rate of earnings growth is a beacon in the night. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. However, before you get too excited we've discovered 1 warning sign for Marsh & McLennan Companies that you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.