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Marsh & McLennan Companies, Inc. (MMC) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Marsh & McLennan Companies, Inc. (MMC)

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Intrinsic Value (DCF)

Current$182.26
→
Intrinsic$211.48
+16%
$128.60$211.48$376.26
Market implies 16% growth for 5 years
MMC shows 16% potential upside using 19% growth — reasonable if fundamentals hold.
At $182, the market prices in continued high-teens cash flow growth (16%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $129 → Bull $376. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →15%17%19%21%
8%$275$302$330$360
10%$175$193$211$232
12%$122$135$149$164
14%$90$100$110$122

Bull Case

  • Bull case ($376) offers 106% upside at 23% growth, 8% discount
  • 14% margin of safety vs. base case estimate
  • Market-implied growth (16%) ≤ historical CAGR (19%)

Bear Case

  • Bear case ($129) implies 29% downside at 15% growth, 12% discount
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5-Year Net Income Projection

Year 1$4.84B
Year 2$5.76B
Year 3$6.86B
Year 4$8.18B
Year 5$9.74B
Terminal$154.33B

📐 Model Inputs

Growth Rate19.1%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$4.06BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is MMC stock undervalued or overvalued?
🟡 FAIRLY VALUED

MMC trades at $182.26, within 10% of our $211.48 intrinsic value estimate. At 9.5% WACC and 19.1% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $123.34 (bear) to $344.58 (bull).

What is MMC's intrinsic value?

Using a 5-year DCF model: Base FCF of $4.06B, projected at 19.1% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $19.46B net debt and dividing by 0.50B shares: Bear $123.34 | Base $211.48 | Bull $344.58. Current price $182.26 implies +14% to base case.

How is MMC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 19.1% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($124.36B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 30.6x.