Intrinsic value of Marsh&McLennan - MMC

Previous Close

$78.06

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$78.06

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying
Our model is not good at valuating stocks of financial companies, such as MMC.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MMC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 40.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.47
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  13,211
  13,475
  13,785
  14,139
  14,537
  14,978
  15,461
  15,988
  16,558
  17,172
  17,831
  18,536
  19,288
  20,089
  20,941
  21,844
  22,801
  23,815
  24,886
  26,018
  27,214
  28,475
  29,806
  31,208
  32,685
  34,241
  35,880
  37,604
  39,419
  41,328
  43,336
Variable operating expenses, $m
 
  3,099
  3,171
  3,252
  3,344
  3,445
  3,556
  3,677
  3,808
  3,950
  4,101
  4,263
  4,436
  4,621
  4,816
  5,024
  5,244
  5,477
  5,724
  5,984
  6,259
  6,549
  6,855
  7,178
  7,518
  7,876
  8,252
  8,649
  9,066
  9,505
  9,967
Fixed operating expenses, $m
 
  7,895
  8,092
  8,294
  8,502
  8,714
  8,932
  9,155
  9,384
  9,619
  9,859
  10,106
  10,358
  10,617
  10,883
  11,155
  11,434
  11,720
  12,012
  12,313
  12,621
  12,936
  13,260
  13,591
  13,931
  14,279
  14,636
  15,002
  15,377
  15,761
  16,155
Total operating expenses, $m
  10,547
  10,994
  11,263
  11,546
  11,846
  12,159
  12,488
  12,832
  13,192
  13,569
  13,960
  14,369
  14,794
  15,238
  15,699
  16,179
  16,678
  17,197
  17,736
  18,297
  18,880
  19,485
  20,115
  20,769
  21,449
  22,155
  22,888
  23,651
  24,443
  25,266
  26,122
Operating income, $m
  2,664
  2,481
  2,523
  2,593
  2,692
  2,819
  2,973
  3,156
  3,366
  3,604
  3,871
  4,167
  4,494
  4,852
  5,242
  5,665
  6,123
  6,618
  7,150
  7,721
  8,334
  8,990
  9,691
  10,439
  11,237
  12,087
  12,991
  13,953
  14,975
  16,061
  17,213
EBITDA, $m
  3,102
  2,929
  2,981
  3,063
  3,175
  3,316
  3,487
  3,687
  3,916
  4,174
  4,463
  4,783
  5,134
  5,519
  5,937
  6,391
  6,881
  7,409
  7,977
  8,586
  9,238
  9,936
  10,681
  11,476
  12,323
  13,224
  14,183
  15,202
  16,285
  17,434
  18,653
Interest expense (income), $m
  178
  175
  184
  195
  207
  221
  236
  253
  271
  291
  312
  335
  359
  385
  412
  442
  473
  506
  541
  578
  617
  658
  702
  748
  796
  847
  901
  957
  1,017
  1,079
  1,145
Earnings before tax, $m
  2,480
  2,306
  2,338
  2,398
  2,485
  2,598
  2,737
  2,903
  3,095
  3,313
  3,559
  3,833
  4,135
  4,467
  4,829
  5,223
  5,650
  6,112
  6,609
  7,143
  7,717
  8,332
  8,989
  9,691
  10,441
  11,240
  12,091
  12,996
  13,959
  14,982
  16,068
Tax expense, $m
  685
  623
  631
  647
  671
  701
  739
  784
  836
  895
  961
  1,035
  1,116
  1,206
  1,304
  1,410
  1,526
  1,650
  1,784
  1,929
  2,084
  2,250
  2,427
  2,617
  2,819
  3,035
  3,264
  3,509
  3,769
  4,045
  4,338
Net income, $m
  1,768
  1,683
  1,707
  1,751
  1,814
  1,896
  1,998
  2,119
  2,259
  2,419
  2,598
  2,798
  3,018
  3,261
  3,525
  3,813
  4,125
  4,462
  4,825
  5,215
  5,634
  6,082
  6,562
  7,075
  7,622
  8,205
  8,826
  9,487
  10,190
  10,937
  11,730

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,026
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,190
  17,500
  17,903
  18,363
  18,879
  19,452
  20,080
  20,764
  21,504
  22,301
  23,157
  24,073
  25,050
  26,090
  27,196
  28,369
  29,612
  30,928
  32,320
  33,790
  35,343
  36,981
  38,709
  40,530
  42,448
  44,469
  46,597
  48,837
  51,193
  53,672
  56,280
Adjusted assets (=assets-cash), $m
  17,164
  17,500
  17,903
  18,363
  18,879
  19,452
  20,080
  20,764
  21,504
  22,301
  23,157
  24,073
  25,050
  26,090
  27,196
  28,369
  29,612
  30,928
  32,320
  33,790
  35,343
  36,981
  38,709
  40,530
  42,448
  44,469
  46,597
  48,837
  51,193
  53,672
  56,280
Revenue / Adjusted assets
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
Average production assets, $m
  9,959
  10,160
  10,394
  10,661
  10,961
  11,293
  11,658
  12,055
  12,485
  12,948
  13,445
  13,976
  14,543
  15,147
  15,789
  16,470
  17,192
  17,956
  18,764
  19,618
  20,519
  21,470
  22,473
  23,531
  24,645
  25,818
  27,053
  28,354
  29,722
  31,161
  32,675
Working capital, $m
  802
  94
  96
  99
  102
  105
  108
  112
  116
  120
  125
  130
  135
  141
  147
  153
  160
  167
  174
  182
  190
  199
  209
  218
  229
  240
  251
  263
  276
  289
  303
Total debt, $m
  4,807
  4,727
  5,001
  5,314
  5,666
  6,056
  6,483
  6,949
  7,453
  7,996
  8,579
  9,203
  9,868
  10,576
  11,329
  12,128
  12,975
  13,871
  14,819
  15,820
  16,877
  17,993
  19,170
  20,410
  21,716
  23,093
  24,542
  26,067
  27,672
  29,360
  31,136
Total liabilities, $m
  11,998
  11,918
  12,192
  12,505
  12,857
  13,247
  13,674
  14,140
  14,644
  15,187
  15,770
  16,394
  17,059
  17,767
  18,520
  19,319
  20,166
  21,062
  22,010
  23,011
  24,068
  25,184
  26,361
  27,601
  28,907
  30,284
  31,733
  33,258
  34,863
  36,551
  38,327
Total equity, $m
  6,192
  5,583
  5,711
  5,858
  6,023
  6,205
  6,405
  6,624
  6,860
  7,114
  7,387
  7,679
  7,991
  8,323
  8,675
  9,050
  9,446
  9,866
  10,310
  10,779
  11,274
  11,797
  12,348
  12,929
  13,541
  14,186
  14,864
  15,579
  16,331
  17,122
  17,953
Total liabilities and equity, $m
  18,190
  17,501
  17,903
  18,363
  18,880
  19,452
  20,079
  20,764
  21,504
  22,301
  23,157
  24,073
  25,050
  26,090
  27,195
  28,369
  29,612
  30,928
  32,320
  33,790
  35,342
  36,981
  38,709
  40,530
  42,448
  44,470
  46,597
  48,837
  51,194
  53,673
  56,280
Debt-to-equity ratio
  0.776
  0.850
  0.880
  0.910
  0.940
  0.980
  1.010
  1.050
  1.090
  1.120
  1.160
  1.200
  1.230
  1.270
  1.310
  1.340
  1.370
  1.410
  1.440
  1.470
  1.500
  1.530
  1.550
  1.580
  1.600
  1.630
  1.650
  1.670
  1.690
  1.710
  1.730
Adjusted equity ratio
  0.301
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319
  0.319

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,768
  1,683
  1,707
  1,751
  1,814
  1,896
  1,998
  2,119
  2,259
  2,419
  2,598
  2,798
  3,018
  3,261
  3,525
  3,813
  4,125
  4,462
  4,825
  5,215
  5,634
  6,082
  6,562
  7,075
  7,622
  8,205
  8,826
  9,487
  10,190
  10,937
  11,730
Depreciation, amort., depletion, $m
  438
  448
  458
  470
  483
  498
  514
  531
  550
  570
  592
  616
  641
  667
  696
  726
  757
  791
  827
  864
  904
  946
  990
  1,037
  1,086
  1,137
  1,192
  1,249
  1,309
  1,373
  1,439
Funds from operations, $m
  1,538
  2,131
  2,165
  2,220
  2,297
  2,394
  2,512
  2,650
  2,809
  2,989
  3,190
  3,413
  3,659
  3,928
  4,221
  4,539
  4,882
  5,253
  5,651
  6,079
  6,537
  7,028
  7,552
  8,111
  8,708
  9,342
  10,018
  10,736
  11,499
  12,309
  13,169
Change in working capital, $m
  -469
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
Cash from operations, $m
  2,007
  2,390
  2,163
  2,218
  2,294
  2,391
  2,508
  2,646
  2,805
  2,985
  3,186
  3,409
  3,654
  3,922
  4,215
  4,532
  4,875
  5,245
  5,644
  6,071
  6,529
  7,019
  7,543
  8,102
  8,697
  9,332
  10,007
  10,724
  11,487
  12,296
  13,155
Maintenance CAPEX, $m
  0
  -439
  -448
  -458
  -470
  -483
  -498
  -514
  -531
  -550
  -570
  -592
  -616
  -641
  -667
  -696
  -726
  -757
  -791
  -827
  -864
  -904
  -946
  -990
  -1,037
  -1,086
  -1,137
  -1,192
  -1,249
  -1,309
  -1,373
New CAPEX, $m
  -253
  -201
  -234
  -267
  -300
  -332
  -365
  -397
  -430
  -463
  -497
  -532
  -567
  -604
  -642
  -681
  -722
  -764
  -808
  -854
  -901
  -951
  -1,003
  -1,057
  -1,114
  -1,173
  -1,235
  -1,300
  -1,368
  -1,439
  -1,514
Cash from investing activities, $m
  -1,056
  -640
  -682
  -725
  -770
  -815
  -863
  -911
  -961
  -1,013
  -1,067
  -1,124
  -1,183
  -1,245
  -1,309
  -1,377
  -1,448
  -1,521
  -1,599
  -1,681
  -1,765
  -1,855
  -1,949
  -2,047
  -2,151
  -2,259
  -2,372
  -2,492
  -2,617
  -2,748
  -2,887
Free cash flow, $m
  951
  1,750
  1,481
  1,493
  1,524
  1,576
  1,646
  1,736
  1,844
  1,972
  2,118
  2,285
  2,471
  2,678
  2,906
  3,156
  3,428
  3,724
  4,045
  4,391
  4,763
  5,164
  5,594
  6,054
  6,547
  7,073
  7,634
  8,232
  8,869
  9,547
  10,268
Issuance/(repayment) of debt, $m
  385
  232
  274
  313
  352
  390
  428
  466
  504
  543
  583
  624
  665
  708
  753
  799
  847
  896
  948
  1,001
  1,057
  1,116
  1,177
  1,240
  1,307
  1,376
  1,449
  1,525
  1,605
  1,688
  1,776
Issuance/(repurchase) of shares, $m
  -651
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -385
  232
  274
  313
  352
  390
  428
  466
  504
  543
  583
  624
  665
  708
  753
  799
  847
  896
  948
  1,001
  1,057
  1,116
  1,177
  1,240
  1,307
  1,376
  1,449
  1,525
  1,605
  1,688
  1,776
Total cash flow (excl. dividends), $m
  334
  1,982
  1,756
  1,806
  1,876
  1,965
  2,074
  2,201
  2,348
  2,515
  2,701
  2,908
  3,136
  3,386
  3,659
  3,954
  4,275
  4,620
  4,992
  5,392
  5,821
  6,280
  6,770
  7,294
  7,853
  8,449
  9,083
  9,757
  10,474
  11,236
  12,044
Retained Cash Flow (-), $m
  321
  -105
  -128
  -147
  -165
  -183
  -200
  -218
  -236
  -254
  -273
  -292
  -312
  -332
  -353
  -374
  -397
  -420
  -444
  -469
  -495
  -523
  -551
  -581
  -612
  -645
  -679
  -714
  -752
  -791
  -832
Prev. year cash balance distribution, $m
 
  714
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,591
  1,627
  1,659
  1,711
  1,783
  1,874
  1,983
  2,112
  2,260
  2,428
  2,616
  2,825
  3,054
  3,306
  3,580
  3,878
  4,200
  4,548
  4,923
  5,325
  5,757
  6,219
  6,713
  7,241
  7,804
  8,404
  9,043
  9,722
  10,445
  11,212
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  2,480
  1,484
  1,435
  1,397
  1,366
  1,340
  1,316
  1,292
  1,266
  1,237
  1,201
  1,160
  1,112
  1,057
  995
  927
  854
  777
  698
  618
  539
  463
  391
  324
  264
  210
  164
  126
  94
  68
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Marsh & McLennan Companies, Inc., a professional services firm, provides advice and solutions in the areas of risk, strategy, and people worldwide. It operates through two segments, Risk and Insurance Services; and Consulting. The Risk and Insurance Services segment offers risk management services, such as risk advice, risk transfer, risk control, and mitigation solutions, as well as insurance, reinsurance broking, catastrophe and financial modeling services, and related advisory services. This segment serves businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Consulting segment provides health, retirement, talent, and investments consulting services and products; and specialized management, and economic and brand consulting services. This segment assists public and private sector employers in the design, management, and administration of employee health care programs; provides a range of strategic and compliance-related retirement services and solutions to corporate, governmental, and institutional clients; advises organizations on the engagement, management, and rewarding of employees; and offers investment consulting and other services to the sponsors of pension funds, foundations, endowments, other investors, and wealth management companies. Marsh & McLennan Companies, Inc. was founded in 1871 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Marsh&McLennan (MMC)

Valuation Ratios
P/E Ratio 22.7
Price to Sales 3
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 20
Price to Free Cash Flow 22.9
Growth Rates
Sales Growth Rate 2.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.2%
Cap. Spend. - 3 Yr. Gr. Rate -8.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 72.6%
Total Debt to Equity 77.6%
Interest Coverage 15
Management Effectiveness
Return On Assets 10.4%
Ret/ On Assets - 3 Yr. Avg. 9.7%
Return On Total Capital 16.1%
Ret/ On T. Cap. - 3 Yr. Avg. 15%
Return On Equity 27.8%
Return On Equity - 3 Yr. Avg. 23.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 43.5%
Gross Margin - 3 Yr. Avg. 42.9%
EBITDA Margin 23.4%
EBITDA Margin - 3 Yr. Avg. 22%
Operating Margin 20.2%
Oper. Margin - 3 Yr. Avg. 18.5%
Pre-Tax Margin 18.8%
Pre-Tax Margin - 3 Yr. Avg. 17.5%
Net Profit Margin 13.4%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 27.6%
Eff/ Tax Rate - 3 Yr. Avg. 28.4%
Payout Ratio 38.6%

MMC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MMC stock intrinsic value calculation we used $13211 million for the last fiscal year's total revenue generated by Marsh&McLennan. The default revenue input number comes from 2016 income statement of Marsh&McLennan. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MMC stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for MMC is calculated based on our internal credit rating of Marsh&McLennan, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Marsh&McLennan.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MMC stock the variable cost ratio is equal to 23%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7702 million in the base year in the intrinsic value calculation for MMC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.9% for Marsh&McLennan.

Corporate tax rate of 27% is the nominal tax rate for Marsh&McLennan. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MMC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MMC are equal to 75.4%.

Life of production assets of 22.7 years is the average useful life of capital assets used in Marsh&McLennan operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MMC is equal to 0.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6192 million for Marsh&McLennan - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 515.07 million for Marsh&McLennan is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Marsh&McLennan at the current share price and the inputted number of shares is $40.2 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
AJG Arthur J. Gall 56.71 prem.  prem.
WLTW Willis Towers 145.36 prem.  prem.
BRO Brown&Brown 42.93 prem.  prem.
PN Patriot Nation 2.33 prem.  prem.
KFY Korn/Ferry Int 34.81 prem.  prem.
Y Alleghany 584.39 prem.  prem.
CBZ CBIZ Inc 15.10 prem.  prem.

COMPANY NEWS

▶ Marsh CEO pays $7.5M for a Nantucket estate called 'Road's End'   [Jun-10-17 08:15AM  American City Business Journals]
▶ What Do Millennials Want from Health Reform? More   [Jun-08-17 02:15PM  Business Wire]
▶ Stocks Hold Record Highs; Amazon.com Nears Major Milestone   [May-25-17 03:00PM  Investor's Business Daily]
▶ Marsh & McLennan Companies Holds 2017 Stockholder Meeting   [May-18-17 12:05PM  Business Wire]
▶ New Study Identifies Winners in Growing InsurTech Space   [May-17-17 05:00AM  Business Wire]
▶ Virgin Pulse Launches Financial Wellbeing Solution   [May-10-17 10:30AM  Marketwired]
▶ Cramer: These Sectors Look Bullish (Part II)   [07:00AM  TheStreet.com]
▶ Marsh & McLennan beats Street 1Q forecasts   [Apr-27-17 07:12AM  Associated Press]
▶ [$$] AIG Considers Greenberg Acolyte as Next CEO   [Apr-22-17 12:08AM  The Wall Street Journal]
▶ [$$] Market Talk: Daily Analysis Roundup   [Apr-21-17 04:48PM  The Wall Street Journal]
▶ [$$] AIG Considers Greenberg Acolyte as Next CEO   [04:04PM  The Wall Street Journal]
▶ Marsh & McLennan Agency Acquires RJF Financial Services   [Apr-05-17 09:00AM  Business Wire]
▶ Top Ranked Growth Stocks to Buy for April 4th   [Apr-04-17 10:42AM  Zacks]
▶ Marsh & McLennan Trades Ex-Dividend Wednesday   [Apr-02-17 10:48AM  Investopedia]
▶ Marsh & McLennan Companies Declares Quarterly Dividend   [Mar-15-17 12:00PM  Business Wire]
▶ Vienna Tops Mercers 19th Quality of Living Ranking   [Mar-14-17 09:22AM  Business Wire]
▶ BusinessWomen First Winner: Sherri Grasak   [Mar-07-17 11:37AM  at bizjournals.com]
▶ [$$] Insurers warned of risks to not completing Brexit plans   [Feb-19-17 01:07PM  at Financial Times]
▶ Investors fight back on aggressive covenant terms   [Jan-13-17 01:25PM  Reuters]
▶ [$$] Covenant clause removal fires up US bond investors   [Jan-11-17 11:29PM  at Financial Times]
Stock chart of MMC Financial statements of MMC Annual reports of MMC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.