Aon Shares Hit 52-Week High - Analyst Blog

By Zacks Equity Research,

Shutterstock photo

On Feb 18, 2014, shares of Aon plc ( AON ) reached a new 52-week high of $85.84. The momentum was driven by solid fourth-quarter earnings results, which included a 0.7% positive earnings surprise. Its fourth-quarter operating earnings of $1.54 per share improved 21% year over year. The outperformance was driven by the company's operating strength, low effective tax rate and capital management initiatives implemented in the quarter.

With respect to earnings trend, this financial service providing company witnessed positive earnings surprises in three of the last four quarters, with an average beat of 3.4%. In terms of revenues, Aon delivered 3% year-over-year improvement, although the number missed the Zacks Consensus Estimate by a whisker. Growth in organic revenues across almost all the segments helped boost the overall revenues of the company. Although expenses shot up, the rise was offset by the increased sales, leading to margin expansion.

Aon has been consistent in enhancing shareholders' value through dividend payouts and share repurchases. In the fourth quarter of 2013, the company expended $77 billion to repurchase 0.97 million Class A Ordinary shares. With a strong cash position we expect this company to come up with more such endeavors to retain investors' confidence.

Aon is pursuing a number of acquisitions and other global expansion strategies that are expected to help the company better serve its clients and generate more revenues. In 2013, Aon's collaborations with National Council on Aging (NCOA), XL Group plc ( XL ), Manchester United plc ( MANU ), National Football League (NFL), Johannesburg-based cricket team bizhub Highveld Lions, Catalyst Payment Reform (CPR), Bolt Solutions Inc. and an Israeli HR consulting firm - AKT - have enhanced its services. Further, the acquisition of Dempsey Partners by Aon Global Risk Consulting in Jun 2013 improved the company's risk solutions capacities, whereas the acquisition of Stratford 360 should help Aon meet the demand of comprehensive and value-added benefits solutions of the rapidly evolving healthcare industry.

The stock gained almost 46% in 1-year period. The overall long-term expected earnings growth rate for this stock is projected at 10.0%. The Zacks Consensus Estimate for 2014 is pegged at $5.21, up 6.6% year over year while the same for 2015 is $5.83, up 11.9% year over year.

Aon currently carries a Zacks Rank #3 (Hold). However, another better-ranked stock in the same sector is Marsh & McLennan Companies, Inc. ( MMC ) with a Zacks Rank #2 (Buy).

AON PLC (AON): Free Stock Analysis Report

MANCHESTER UTD (MANU): Free Stock Analysis Report

MARSH &MCLENNAN (MMC): Free Stock Analysis Report

XL GROUP PLC (XL): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AON , MANU , MMC , XL

More from


Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by