We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Willis Towers Rises 18.1% in 6 Months: How to Play the Stock
Read MoreHide Full Article
Willis Towers Watson Public Limited Company (WTW - Free Report) shares have gained 18.1% in the past six months, outperforming the industry’s growth of 9%. The Finance sector and the Zacks S&P 500 index have returned 11.8% and 6.8%, respectively, in the said time frame. With a market capitalization of $30.88 billion, the average volume of shares traded in the last three months was 0.6 million.
WTW Outperforms Industry, Sector, S&P in 6 Months
Image Source: Zacks Investment Research
WTW has a solid surprise history. The insurance broker surpassed earnings estimates in each of the last four quarters, the average being 7.34%.
Willis Towers’ Growth Projection Encourages
The Zacks Consensus Estimate for Willis Towers’ 2025 earnings per share and revenues indicates a year-over-year increase of 9.1% and 5.5%, respectively, from the corresponding 2024 estimates.
Shares are Affordable
This Zacks Rank #3 (Hold) insurance broker is undervalued compared with its industry. It is currently trading at a price-to-earnings multiple of 16.7, lower than the industry average of 21.
Can the Stock Retain the Momentum?
Willis Towers’ growth strategy encompasses a focus on improving operating margins, increasing free cash flow conversion and driving sustainable revenue growth. Focus on core opportunities with the highest growth and return, which include gaining market share in Risk and Broking and Individual Marketplace, should spur long-term growth and return more value to shareholders.
Well-performing Health, Wealth & Career and Risk & Broking segments, driven by solid customer retention levels, growing new business and geographic diversification, continue to fuel the top line. Most of the company's operating regions experienced revenue growth for 15 straight quarters.
Strategic acquisitions have expanded its geographical footprint in the last few years in countries like Italy, Canada, the United Kingdom and France, as well as ramped up its product portfolio.
Solid operational performance ensures smooth cash flow. WTW continues to expect a year-over-year improvement in free cash flow margin in 2024.
Distribution of Wealth
Banking on its capital position, WTW distributes wealth to shareholders in the form of dividend hikes and share repurchases. Its dividend has witnessed a five-year CAGR (2019-2024) of 6.2%. The insurer expects share repurchases to total approximately $900 million in 2024, subject to market conditions and other relevant factors.
Headwinds
Despite the upside potential, Willis Towers’ expenses have been rising over the last several quarters. Higher salary expenses, incentive costs, improved non-income-related tax expenses and marketing costs, higher restructuring costs, as well as increased consulting and compensation costs related to the Transformation program result in the contraction of margins.
WTW’s trailing 12-month ROE of 18.5% is weak when compared with the industry average of 31%, reflecting its inefficiency in using shareholders' funds.
The Zacks Consensus Estimate for W.R. Berkley’s 2025 earnings per share and revenues implies year-over-year growth of 9.6% and 7.9%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 7.10%. In the past six months, shares of WRB have rallied 7.8%.
The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share and revenues implies year-over-year growth of 23.1% and 27%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 14.9%. In the past six months, shares of PLMR have rallied 28.5%.
The Zacks Consensus Estimate for The Travelers’ 2025 earnings per share and revenues implies year-over-year growth of 9.1% and 7.4%, respectively. It beat earnings estimates in three of the past four quarters and missed in one, with an average surprise of 25.4%. In the past six months, shares of TRV have rallied 18.5%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Willis Towers Rises 18.1% in 6 Months: How to Play the Stock
Willis Towers Watson Public Limited Company (WTW - Free Report) shares have gained 18.1% in the past six months, outperforming the industry’s growth of 9%. The Finance sector and the Zacks S&P 500 index have returned 11.8% and 6.8%, respectively, in the said time frame. With a market capitalization of $30.88 billion, the average volume of shares traded in the last three months was 0.6 million.
WTW Outperforms Industry, Sector, S&P in 6 Months
Image Source: Zacks Investment Research
WTW has a solid surprise history. The insurance broker surpassed earnings estimates in each of the last four quarters, the average being 7.34%.
Willis Towers’ Growth Projection Encourages
The Zacks Consensus Estimate for Willis Towers’ 2025 earnings per share and revenues indicates a year-over-year increase of 9.1% and 5.5%, respectively, from the corresponding 2024 estimates.
Shares are Affordable
This Zacks Rank #3 (Hold) insurance broker is undervalued compared with its industry. It is currently trading at a price-to-earnings multiple of 16.7, lower than the industry average of 21.
Can the Stock Retain the Momentum?
Willis Towers’ growth strategy encompasses a focus on improving operating margins, increasing free cash flow conversion and driving sustainable revenue growth. Focus on core opportunities with the highest growth and return, which include gaining market share in Risk and Broking and Individual Marketplace, should spur long-term growth and return more value to shareholders.
Well-performing Health, Wealth & Career and Risk & Broking segments, driven by solid customer retention levels, growing new business and geographic diversification, continue to fuel the top line. Most of the company's operating regions experienced revenue growth for 15 straight quarters.
Strategic acquisitions have expanded its geographical footprint in the last few years in countries like Italy, Canada, the United Kingdom and France, as well as ramped up its product portfolio.
Solid operational performance ensures smooth cash flow. WTW continues to expect a year-over-year improvement in free cash flow margin in 2024.
Distribution of Wealth
Banking on its capital position, WTW distributes wealth to shareholders in the form of dividend hikes and share repurchases. Its dividend has witnessed a five-year CAGR (2019-2024) of 6.2%. The insurer expects share repurchases to total approximately $900 million in 2024, subject to market conditions and other relevant factors.
Headwinds
Despite the upside potential, Willis Towers’ expenses have been rising over the last several quarters. Higher salary expenses, incentive costs, improved non-income-related tax expenses and marketing costs, higher restructuring costs, as well as increased consulting and compensation costs related to the Transformation program result in the contraction of margins.
WTW’s trailing 12-month ROE of 18.5% is weak when compared with the industry average of 31%, reflecting its inefficiency in using shareholders' funds.
Stocks to Consider
Investors interested in the insurance industry may look at some better-ranked players like Palomar Holdings, Inc. (PLMR - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) , 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.
The Zacks Consensus Estimate for W.R. Berkley’s 2025 earnings per share and revenues implies year-over-year growth of 9.6% and 7.9%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 7.10%. In the past six months, shares of WRB have rallied 7.8%.
The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share and revenues implies year-over-year growth of 23.1% and 27%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 14.9%. In the past six months, shares of PLMR have rallied 28.5%.
The Zacks Consensus Estimate for The Travelers’ 2025 earnings per share and revenues implies year-over-year growth of 9.1% and 7.4%, respectively. It beat earnings estimates in three of the past four quarters and missed in one, with an average surprise of 25.4%. In the past six months, shares of TRV have rallied 18.5%.