Financial Review: Marsh & McLennan Companies (MMC) versus NFP Corp (NFP)

NFP Corp (NYSE: NFP) and Marsh & McLennan Companies (NYSE:MMC) are both multiline insurance & brokers – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Insider & Institutional Ownership

85.1% of Marsh & McLennan Companies shares are held by institutional investors. 1.5% of Marsh & McLennan Companies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares NFP Corp and Marsh & McLennan Companies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
NFP Corp N/A N/A N/A $0.66 N/A
Marsh & McLennan Companies $13.21 billion 3.21 $1.77 billion $3.65 22.74

Marsh & McLennan Companies has higher revenue and earnings than NFP Corp. NFP Corp is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NFP Corp and Marsh & McLennan Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NFP Corp N/A N/A N/A
Marsh & McLennan Companies 13.86% 28.88% 10.26%

Analyst Recommendations

This is a breakdown of current recommendations for NFP Corp and Marsh & McLennan Companies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NFP Corp 0 0 0 0 N/A
Marsh & McLennan Companies 0 4 6 0 2.60

Marsh & McLennan Companies has a consensus price target of $84.60, suggesting a potential upside of 1.93%.

Dividends

Marsh & McLennan Companies pays an annual dividend of $1.50 per share and has a dividend yield of 1.8%. NFP Corp does not pay a dividend. Marsh & McLennan Companies pays out 41.1% of its earnings in the form of a dividend. Marsh & McLennan Companies has increased its dividend for 7 consecutive years.

Summary

Marsh & McLennan Companies beats NFP Corp on 10 of the 11 factors compared between the two stocks.

NFP Corp Company Profile

National Financial Partners Corp. (NFP) and its benefits, insurance and wealth management businesses provide a range of advisory and brokerage services to the Company’s clients. NFP serves corporate and high net worth individual clients throughout the United States and in Canada, with a focus on the middle market and entrepreneurs. The Company operates in three segments: the Corporate Client Group (the CCG), the Individual Client Group (the ICG) and the Advisor Services Group (the ASG). The CCG is a corporate benefits advisor in the middle market, offering independent solutions. The ICG is in the delivery of independent life insurance, annuities, long term care and wealth transfer solutions for high net worth individuals. The ASG, including NFP Securities, Inc. (NFPSI), is an independent broker-dealer and registered investment advisor. In July 2013, National Financial Partners Corp announced the completion of its acquisition by a controlled affiliate of Madison Dearborn Partners, LLC.

Marsh & McLennan Companies Company Profile

Marsh & McLennan Companies, Inc. is a professional services firm offering clients advice and solutions in risk, strategy and people. The Company is the parent company of various risk advisors and specialty consultants, including Marsh, the insurance broker; Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of human resource and investment related financial advice and services, and Oliver Wyman Group, the management and economic consultancy. It conducts business through two segments: Risk and Insurance Services, which includes risk management activities, as well as insurance and reinsurance broking and services, and Consulting includes health, retirement, talent and investments consulting services and products, and specialized management, economic and brand consulting services. It conducts business in the Risk and Insurance Services segment through Marsh and Guy Carpenter. It conducts business in the Consulting segment through Mercer and Oliver Wyman Group.

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