Should You Retain Willis Towers (WTW) in Your Portfolio?
Willis Towers Watson Public Limited Company WTW has been benefiting from growing healthcare premiums, improved client retention, higher software sales and solid balance sheet.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $15.23, indicating year-over-year increases of 12.6%. The expected long-term earnings growth is pegged at 16%, better than the industry average of 11.3%.
Earnings Surprise History
Willis Towers has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average being 3.80%.
Zacks Rank & Price Performance
The company currently carries a Zacks Rank #3 (Hold). The stock has rallied 5.2%, outperforming the industry’s growth of 0.9% in the past year.
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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.
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' strategic inorganic expansion expanded its geographical footprint in the last few years, added capabilities and reinforced its portfolio.
Willis Towers re-cast its 2024 financial target following the divestiture of its Russian subsidiaries. The insurer projects the annualized run-rate impact from the divestiture of its Russian operations to be nearly $120 million. WTW remains 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 and to generate annual cost savings in excess of $360 million by the end of 2024.
Willis Towers remains focused on improving liquidity while maintaining a solid balance sheet. WTW had full capacity in undrawn $1.5 billion revolving credit facility, reflecting its sufficient cash reserves to meet its short-term debt obligations.
Willis Towers remains committed to enhancing its shareholders' value and focused on deploying excess capital and cash flow into share repurchases. Riding on solid financial position, the insurer intends to continue to reward its shareholders, new business opportunities and pursue opportunistic mergers and acquisitions.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Root, Inc. ROOT, Kinsale Capital Group, Inc. KNSL and CNA Financial Corporation CNA, 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.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the last six months period, ROOT lost 80.2%.
The Zacks Consensus Estimate for ROOT’s 2023 earnings indicates a year-over-year increase of 23.9%.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. In the last six months period, KNSL gained 6.9%.
The Zacks Consensus Estimate for KNSL’s 2023 earnings implies a year-over-year rise of 22.4%.
The Zacks Consensus Estimate for CNA Financial’s 2023 earnings implies a year-over-year rise of 12.5%. In the last six months period, CNA lost 3.6%.
The Zacks Consensus Estimate for CNA’s 2023 earnings has moved 2.5% north in the past 60 days.
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