Yahoo Finance Should You Retain Willis Towers (WTW) Stock in Your Portfolio?
Willis Towers Watson Public Limited Company WTW has been benefiting from growth across global lines of business, strategic inorganic expansion, higher demand for products and advisory work and a solid balance sheet.
Growth Projections
The Zacks Consensus Estimate for Willis Towers’ 2023 earnings is pegged at $14.42, indicating a 7.53% increase from the year-ago reported figure on 4.3% higher revenues of $9.25 billion. The consensus estimate for 2024 earnings is $17.09, indicating an 18.5% increase from the year-ago reported figure on 5.5% higher revenues of $9.76 billion.
Earnings Surprise History
Willis Towers has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average being 1.24%.
Zacks Rank & Price Performance
Willis Towers currently has a Zacks Rank #3 (Hold). The stock has rallied 13.4% compared with the industry’s growth of 19.9% in the past year.
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Business Tailwinds
The Health, Wealth & Career segment is expected to gain from higher demand for products and advisory work, new client appointments and growing healthcare premiums. Increased consulting work, strong client demand for talent and compensation products and employee engagement offerings are also likely to add to the upside.
The Corporate Risk and Broking segment is expected to gain from double-digit growth across global lines of business, notably in Aerospace, Natural Resources and FINEX, improved client retention as well as strong contributions from both construction and M&A solutions. Increased software sales and advisory work should continue to drive the Insurance Consulting and Technology business.
Willis Towers’ growth strategy focuses on core opportunities with the highest growth and returns. The broker innovated and developed its offerings in markets and boosted its abilities in faster-growth markets. Strategic buyouts add to the upside apart from expanding its geographical footprint, increasing capabilities and strengthening its portfolio.
Willis Towers transferred its ownership of its Russian subsidiaries to local management in 2022. Considering the completion of the divestiture, it recasts its 2024 financial targets. WTW remained committed to delivering mid-single-digit organic revenue growth and 400-500 basis points of adjusted operating margin expansion. It expects to increase its revenues to more than $9.9 billion. It expects to generate annual cost savings in excess of $360 million by the end of 2024.
The insurer expects adjusted earnings per share of $17.5-$20.5 and three-year free cash flow (FCF) of $4.3-$5.3 billion. The transformation program delivered $75 million of incremental annualized savings in the first quarter of 2023. The company expects to deliver approximately $100 million of incremental run-rate savings from the transformation program in 2023. It brings the total cumulative annualized savings to $224 million since the program's inception.
Willis Towers has been improving its liquidity while maintaining a solid balance sheet. FCF should continue to improve riding on favorable working capital improvements, resulting mostly from higher cash collections and lower discretionary compensation payments. Cash flow from operations surged more than six-fold year over year to $134 million.
WTW has modified its target of generating $4.3-$5.3 billion in cumulative free cash flow between 2022 and 2024. Over the near term, the insurer expects FCF as a percentage of revenues to meaningfully improve from the prior-year base of 8%. Over the long term, the company expects continual improvement toward peers’ free cash flow margins.
The company remains committed to enhancing its shareholder value. Its dividend witnessed an eight-year CAGR (2016-2023) of nearly 7.2%. As of Mar 31, 2023, approximately $1.2 billion remained on the current repurchase authority. Additionally, the brokerage insurer intends to repay in full $250 million of 4.625% senior notes, which mature during the third quarter of 2023.
Willis Towers remains focused on deploying excess capital and cash flow into share repurchases. With a solid financial position, it intends to continue to reward its shareholders, technology and new business opportunities and pursue opportunistic mergers and acquisitions.
Stocks to Consider
Some better-ranked stocks from the brokerage insurance industry are Brown & Brown, Inc. BRO, Erie Indemnity Company ERIE and Ryan Specialty Holdings Inc. RYAN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brown & Brown has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 1.19%. In the past year, BRO has gained 14.6%.
The Zacks Consensus Estimate for BRO’s 2023 and 2024 earnings per share is pegged at $2.52 and $2.75, indicating a year-over-year increase of 10.5% and 9.2%, respectively.
The Zacks Consensus Estimate for Erie Indemnity’s 2023 and 2024 earnings has moved 3.8% and 11.7% north, respectively, in the past 60 days. In the past year, ERIE has gained 23.9%.
The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings per share is pegged at $7.20 and $8.18, indicating a year-over-year increase of 26% and 13.6%, respectively.
Ryan Specialty has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 2.67%. In the past year, RYAN has gained 16.7%.
The Zacks Consensus Estimate for RYAN’s 2023 and 2024 earnings per share is pegged at $1.33 and $1.64, indicating a year-over-year increase of 15.6% and 23.3%, respectively.
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Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
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Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
