Marsh & McLennan Companies, Inc. (MRSH): what the price requires
At today's price, Marsh & McLennan Companies, Inc. (MRSH) is priced for +5.0% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MRSH
Headline
| Field | Value |
|---|---|
| Ticker | MRSH |
| Company | Marsh & McLennan Companies, Inc. |
| Current price | $181.26/sh |
| Composition | Risk and Insurance Services 64% / Consulting 36% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | fee-financial |
| Implied earnings growth | 5.0% |
| Price-to-earnings | 23.3x |
| Earnings yield | 4.3% |
Solve inputs: computed at a 8.7% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~4.9pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.53σ |
| cohort percentile (of 49 peers) | 57 |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.08x | 3 | expensive |
| Earnings | 2.80x | 2 | expensive |
| Relative | 1.49x | 1 | expensive |
| Growth | 1.14x | 1 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.
Per-Model Detail (n=7)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $154.76 | 1.17x | yes | TBVPS $29.98 × 5.16x (ROE (TTM) 26.9% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption)) |
| Relative Valuation | Relative | $121.40 | 1.49x | yes | P/E 14.43x (blended: static sector reference 11x + trailing (TTM) 22x), scenarios: 12.0x / 14.4x / 16.8x (bear / base = reference held flat / bull), EV/EBITDA 12.19x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $87.31 | 2.08x | yes | BV/sh $29.98, ROE (TTM) 26.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $151.16 | 1.20x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $159.23 | 1.14x | yes | Rev $27.5B, growth 10% (input: historical growth; tapered), Terminal P/S: 2.7x / 3.2x / 3.7x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $73.46 | 2.47x | yes | √(22.5 × EPS $8.00 × BVPS $29.98) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $51.83 | 3.50x | yes | EPS $8.00 × (8.5 + 2×-0.4%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $86.49 | 2.10x | yes | EPS $8.00 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $19.6b |
| Net debt / NOPAT (after-tax) | 3.87x |
| Net debt / operating income (pre-tax) | 2.91x |
| Interest coverage | 7.0x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
Bullet Takeaways
At $162.37 the market is pricing Marsh & McLennan to grow fee earnings only about 2.8% a year, read off a roughly 21x earnings multiple. That is a modest assumption for a broker that has compounded faster and just posted its 18th straight year of margin expansion.
The fundamentals are running ahead of that price. Full-year 2025 delivered 10% revenue growth (4% organic), 9% adjusted EPS growth, and Q1 2026 grew consolidated revenue, adjusted operating income, and EPS each 8%. The fee-financial reverse-DCF band lands above the current price.
The watch item is capital allocation. The $7.25 billion of senior notes issued for the McGriff acquisition lifted net debt to about $19.6 billion at 3.3x operating income, and the company is also navigating a CEO succession.
Bull Case
Look at the gap between what the market is pricing in and what the business actually delivers. At $162.37 (June 27, 2026) Marsh & McLennan trades around 21x earnings, a 4.8% earnings yield, which inverts into an assumption that fee earnings grow only about 2.8% a year. Yet this is a company that produced full-year 2025 revenue growth of 10%, underlying organic growth of 4%, adjusted EPS growth of 9%, and its 18th consecutive year of reported margin expansion. The price embeds a pace below what the broker has demonstrated, so the bull case starts from the observation that the market is underwriting a deceleration the company has not shown.
The economics behind that record are durable and capital-light. An insurance broker earns recurring commissions and fees for placing risk and advising clients, not by deploying its own capital, which is why Marsh runs a trailing return on equity near 26.9% on a thin book. Its two engines, Risk and Insurance Services and a Consulting segment spanning "health, wealth and career advice, solutions and products, and specialized management, strategic, economic and brand consulting services" (FY2025 10-K, accession 0000062709-26-000022), give it diversified, advice-led revenue that compounds with client retention and rising insurance pricing. Q1 2026 carried the momentum forward with revenue, adjusted operating income, and EPS each up 8%.
The valuation methods that fit a fee business support more than the price. The company also keeps shrinking its share count. For a buyer who believes Marsh sustains its mid-single-digit organic growth and continued margin expansion, the bull case is a high-return, recurring-revenue compounder priced for a slowdown that is not in evidence.
Bear Case
The capital-allocation question is the live one, because Marsh just made its largest bet in years and funded it with debt. To acquire McGriff in November 2024, the company "issued $7.25 billion in senior notes" across a ladder of maturities (FY2025 10-K, accession 0000062709-26-000022), and net debt now stands at about $19.6 billion, roughly 3.3x operating income, with interest coverage near 6.3x and only $1.6 billion of liquid assets. The filing's debt-maturity schedule shows $1.3 billion due in each of the next two years (accession 0000062709-26-000022), so a meaningful share of cash flow is committed to refinancing and integration rather than buybacks or organic reinvestment. A debt-funded acquisition is only good capital allocation if the synergies and revenue retention materialize, and integration risk on a deal this size is real.
The governance backdrop adds uncertainty at the top. The company is navigating CEO succession, and analyst commentary has framed recent quarters around whether management can maintain momentum while digesting McGriff. Leadership transitions at acquisitive companies are exactly when capital-allocation discipline matters most, and the market has noticed: the consensus rating is Hold, and estimates for operating cash EPS have been revised downward for 2025 and 2026 on lower organic-growth and margin-expansion expectations.
The price leaves limited room if growth softens. At 21x earnings Marsh sits in the upper half of the fee-financial peer group, and the static methods that price current earnings are well below the quote: Earnings Yield at $86, Simple Excess Return at $87, Graham Number at $73. The filing itself cautions that "it is difficult to accurately forecast our commission revenues, including whether they will significantly decline," which would force the company to "adjust our plans for future acquisitions, capital expenditures" (accession 0000062709-26-000022), and notes some competitors "may have greater financial resources" (accession 0000062709-26-000022). The bear case is that a premium-multiple broker carrying fresh acquisition debt through a leadership change has more ways to disappoint than to surprise if organic growth slips from the 4% the market already expects.
Valuation
An insurance broker is worth the fee earnings it produces, so Marsh is read off price-to-earnings rather than book. At $162.37 the stock trades near 21x earnings, a 4.8% earnings yield, which inverts into an assumption that fee earnings grow only about 2.8% a year over a five-year stage, computed at an 8.7% cost of equity. That pace is within what the company has delivered, but the multiple sits in the upper half of the fee-financial group, so the reverse solve labels the assumption within range rather than cheap or stretched.
The methods that suit a high-return fee business cluster around and above the price. The Bank Fair Value method, which applies a tangible-book multiple justified by the 26.9% return on equity, lands at $155, Two-Stage Excess Return at $151, and Discounted Future Market Cap at $135. The fee-financial reverse-DCF band is higher, from $201 to $236 with a base near $233, reflecting the normalized fee-earnings power. The static methods that capitalize current earnings without crediting growth are lower, with Earnings Yield at $86 and the Graham approaches near $52 to $73, which is why the asset and earnings-power frames look expensive on a name whose value is its recurring fee stream.
The synthesis is a high-quality compounder priced fairly to modestly cheap on its own fee economics. The reverse-DCF base above the price and the demonstrated mid-single-digit organic growth argue the market is pricing a deceleration the company has not yet shown. The offset is the upper-half multiple plus the acquisition debt and succession overhang, which is why several near-the-price methods rather than the higher band are the realist's anchor. The price reflects a market paying a premium for a durable, capital-light franchise while withholding extra credit until McGriff is digested and the leadership transition is complete.
Catalysts
The recent prints frame a steady compounder. Full-year 2025, reported in January 2026, delivered 10% revenue growth, 4% organic growth, 9% adjusted EPS growth, and an 18th straight year of reported margin expansion (Insurance Journal; MMC 8-K). Q1 2026 continued it, with consolidated revenue up 8% and adjusted operating income and EPS each up 8%, driven by both Risk and Insurance Services and Consulting (Motley Fool transcript; Simply Wall St).
The forward set centers on integration, organic momentum, and leadership. Management guides 2026 underlying revenue growth similar to 2025, around 4%, and the swing factors are McGriff integration and revenue retention, the launch of its Thrive program, the CEO succession process, and whether organic growth and margin expansion hold as estimates have been trimmed. Sentiment is neutral, with a consensus Hold across covering analysts and downward revisions to 2025 and 2026 operating cash EPS reflecting lower organic-growth expectations (Public.com; Investing.com). The next several prints will test whether the acquisition adds to growth or merely replaces it.
Sources: Marsh & McLennan FY2025 and Q1 2026 results (Insurance Journal; MMC 8-K; Motley Fool transcript, 2026); Simply Wall St valuation note; Public.com and Investing.com analyst coverage (2026).
Peer Cohorts (Per Segment, With Filing Citations)
Risk and Insurance Services (reported)
- AON (Aon plc)
- (no filing in the citation store)
- WTW (WILLIS TOWERS WATSON PLC)
- (no filing in the citation store)
- AJG (ARTHUR J. GALLAGHER & CO.)
- (no filing in the citation store)
- BRO (BROWN & BROWN, INC.)
- (no filing in the citation store)
- RYAN (RYAN SPECIALTY HOLDINGS, INC.)
- (no filing in the citation store)
- GSHD (GOOSEHEAD INSURANCE, INC.)
- (no filing in the citation store)
- BWIN (The Baldwin Insurance Group, Inc.)
- (no filing in the citation store)
Consulting (reported)
- ACN (Accenture plc)
- (no filing in the citation store)
- BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
- (no filing in the citation store)
- EXLS (EXLSERVICE HOLDINGS, INC.)
- (no filing in the citation store)
- HURN (HURON CONSULTING GROUP INC.)
- (no filing in the citation store)
- FCN (FTI CONSULTING, INC)
- (no filing in the citation store)
- KFY (KORN FERRY)
- (no filing in the citation store)
- CBZ (CBIZ, Inc.)
- (no filing in the citation store)
- G (GENPACT LIMITED)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.