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Willis Towers (WLTW) to Report Q1 Earnings: What's in Store?

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Willis Towers Watson Public Limited Company will report first-quarter 2020 results on Apr 30, before market open.

The company delivered a positive earnings surprise in three of the last four quarters, the average beat being 0.65%.

Q1 Earnings & Revenue Expectations

The Zacks Consensus Estimate for Willis Towers’ earnings of $3.17 per share implies a 6.3% increase from the prior-year reported number. The consensus estimate for sales of $2.47 billion suggests a 7% rise from the year-ago reported figure.

Let’s see how things have shaped up for the upcoming announcement.

Willis Towers’ first-quarter results are likely to reflect improved organic commissions and fees, higher consulting and brokerage services, new business generation and higher renewals.

Commissions and fees are expected to have benefited from organic growth across segments and contribution from acquisitions.

Human Capital & Benefits, the company’s largest segment, is likely to have benefited from higher consulting and brokerage services, increased demand in Data Services and advisory work across all geographies. The Zacks Consensus Estimate for Human Capital & Benefits revenues is pegged at $855 million, indicating 3.1% upside from the year-ago reported figure.

Corporate Risk & Broking revenues are expected to have been aided by new business generation and strong renewals. The Zacks Consensus Estimate for Corporate Risk & Broking revenues is pegged at $766 million, implying 5.2% rise from the year-ago reported figure.

The Benefits Deliver and Administration segment is likely to have benefited from continued extension of its client base and increased demand for project work in the mid-market and large-market spaces. The Zacks Consensus Estimate for Benefits Delivery and Administration segment’s revenues stands at $206 million, indicating a significant increase of 52.6% from the year-earlier reported number.

Continued enrolment and a robust sales pipeline are expected to have fueled exchange business.

However, high levels of indebtedness might have escalated interest expenses. Other operating expenses are likely to have increased due to addition of TRANZACT expenses and higher professional services expenses. Expenses are likely to have weighed on margin expansion.

Free cash flow is likely to have decreased due to unfavorable working capital changes and negative cash flows of TRANZACT.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Willis Towers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here as you can see below.

Earnings ESP: Willis Towers has an Earnings ESP of -2.70%. This is because the Most Accurate Estimate of $3.08 is pegged lower than the Zacks Consensus Estimate of $3.17. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Willis Towers Watson Public Limited Company Price and EPS Surprise

Zacks Rank: Willis Towers carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

American International Group, Inc. (AIG - Free Report) is slated to report first-quarter earnings on May 4. It has a Zacks Rank #3 and an Earnings ESP of +1.60%.

The Allstate Corporation (ALL - Free Report) is set to report first-quarter earnings on May 5. The company is a Zacks #3 Ranked player and has an Earnings ESP of +2.18%.

Kemper Corporation (KMPR - Free Report) is slated to announce first-quarter earnings on May 4. The stock has an Earnings ESP of +12.57% and is a #2 Ranked player.

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