Why Should You Hold Willis Towers (WLTW) In Your Portfolio?
Zacks Investment Research | Nov 14, 2019 10:28PM ET
Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is well poised for growth on the back of its capital position and strategic initiatives.
Its third-quarter 2019 adjusted earnings of $1.31 per share beat the Zacks Consensus Estimate by 0.8%. The company witnessed strong total and organic revenue growth and continued margin expansion.
The company’s revenues have been witnessing an uptick on organic growth in commission and fees. Commissions and fees associated with business transactions showed improvement, riding on segmental organic growth and rich contribution from acquisitions. Its geographic diversification supports overall progress. With solid customer retention levels and thriving new business, we expect Willis Towers to ramp up its revenues.
Additionally, Willis Towers’ exchange business continues to retain solid momentum. The company maintains a robust 2019 sales pipeline in both the middle and large markets.
Its strategic initiatives, such as certain buyouts helped it expand its geographical existence in places like Italy, Canada, the U.K. and France. Recently, the company acquired TRANZACT to speed up its direct-to-consumer U.S. health care strategy and strengthen its profile in the health care space.
Its improving liquidity owing to a solid balance sheet also impresses. Steady cash flow is expected to help the company engage in capital deployment for buybacks, dividend payouts, debt repayments, acquisitions and investments that drive and support growth. With a solid financial position, we expect the company to continue rewarding its shareholders, retaining investor confidence in the stock and attracting potential investors.
However, its operating expenses have been rising over the last several quarters, resulting in the contraction of margins. Expenses more than doubled in the last five years with net margin contracting 130 basis points.
The Zacks Consensus Estimate for current-year earnings is pegged at $10.92, suggesting an improvement of 12.2% from the year-ago reported number. Meanwhile, the consensus mark for revenues stands at $8.9 billion, indicating 5.6% growth from the year-ago reported figure.
For 2020, the Zacks Consensus Estimate for earnings stands at $11.94, hinting at 9.4% growth from the year-earlier reported figure. Further, the consensus mark for revenues is pegged at $9.5 billion, implying 6.2% rise from the year-earlier reported figure.
Shares of this Zacks Rank #3 (Hold) company have rallied 19.4% in a year, underperforming its Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.