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Why You Should Hold on to Willis Towers Watson Stock Now


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Estimates for Willis Towers Watson plc WLTW have been revised upward by a cent over the past 30 days, reflecting analysts' confidence in the stock. Shares of the company have slipped 1.5% year to date against its industry's increase of 9.1%. The company remains well-poised for growth, banking on its operational efficiencies, investment in new growth avenues, strengthening of client services as well as a solid capital position.



The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is the weighted average of all three factors, helping to identify stocks with the most attractive value, best growth and the most promising momentum.

Willis Towers expects adjusted earnings per share between $9.88 and $10.12, organic revenue growth of about 4% and EBITDA to be around 25% in 2018.

Let's focus on the factors that make Willis Towers a good investment option.  

Improving Top Line : Willis Towers has been witnessing increasing revenues over the past several years, driven by organic growth across segments and a rich contribution from acquisitions. The company projects constant currency revenue growth to hover around 3% (4% on an organic basis) in 2018. The stock carries a Zacks Rank #3 (Hold).

Revenues are estimated to improve in low-single digits for Human Capital & Benefits, Corporate Risk & Broking and Investment, Risk & Reinsurance while the same for Benefits Delivery & Administration is projected in the mid- to high-single digits.

Solid Momentum at Exchange Business :  Willis Towers maintains a robust 2018 as well as 2019 sales pipeline in both the middle and large markets. For 2018, the company enrolled 0.2 million lives with 35,000 retirees in the individual marketplace and also estimates another 45,000-55,000 retirees to enroll further in the year. For 2019, the company has enrolled about 0.3 million lives. The company thus remains upbeat about long-term growth of this business.

Effective Capital Deployment : Banking on a solid capital position, the company has been prudently enhancing its shareholder value. It maintains a dividend payout ratio of about 25% and expects to buy back in the range of $600-$800 million for 2018. Its dividend yield of 1.4% betters the industry average of 1.1%, making it an attractive pick for yield-seeking investors.

Growth Projections : The Zacks Consensus Estimate for earnings per share is pegged at $9.56 for 2018 and at $10.76 for 2019. While the consensus mark for 2018 reflects a year-over-year rise of 12.3%, the same for 2019 improved nearly 12.5%.

The top line is estimated to improve 3.8% and 3.9% for 2018 and 2019, respectively.

The expected long-term earnings growth rate is pegged at 11.8%, slightly higher than the industry average of 11.2%.

Positive Earnings Surprise History : Willis Towers surpassed the Zacks Consensus Estimate in the last three quarters with an average beat of 3.19%, reflecting its operational efficiency.

Stocks to Consider

Some better-ranked stocks in the life insurance industry are Athene Holding Ltd. ATH , Primerica, Inc. PRI and American Equity Investment Life Holding Company AEL .

Athene issues, reinsures and acquires retirement savings products in the United States. The company's average four-quarter positive surprise is 15.03%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Primerica distributes financial products to middle income households in the United States and Canada. The company's average four-quarter earnings surprise is 5.89%. The stock has a Zacks Rank of 1.

American Equity Investment provides life insurance products and services in the United States. The company's average four-quarter beat is 22.24%. The stocks carries a Zacks Rank #2 (Buy).

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Primerica, Inc. (PRI): Free Stock Analysis Report

Willis Towers Watson Public Limited Company (WLTW): Free Stock Analysis Report

Athene Holding Ltd. (ATH): Free Stock Analysis Report

American Equity Investment Life Holding Company (AEL): Free Stock Analysis Report

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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 Symbols: PRI , WLTW , ATH , AEL



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