What Awaits Willis Towers Watson (WLTW) in Q2 Earnings?

Willis Towers Watson Public Limited Company WLTW is slated to report second-quarter 2020 results on Jul 30, before market open. The company delivered earnings surprise of 6.37% in the last reported quarter.

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

Factors to Consider

Revenues in the second quarter are likely to have been aided by higher organic commissions and fees, solid customer retention levels, growth in new business and strong exchange business. However, Willis Towers anticipates revenues in the second quarter to remain under pressure due to the pandemic. The Zacks Consensus Estimate for revenues is pegged at $2.1 billion, flat compared with the year-ago quarter reported figure.

Commissions and fees are expected to have benefited from organic growth across segments and rich contribution from acquisitions as well as geographic diversification.

Human Capital & Benefits, the largest segment of the company, is likely to have been aided by new businesses. This, in turn, is expected to have aided North America revenues. Lower advisory activity due to reduced discretionary spending by the companies may have affected Talent and Rewards revenues in the to-be-reported quarter. The Zacks Consensus Estimate for segment revenues is pegged at $767 million, indicating a downside of 3.8% from the year-ago quarter reported figure, given the challenges faced due to the pandemic. However, cost management efforts are expected to have aided margins.

Lower advisory activity due to reduced discretionary spending by the companies may have affected Talent and Rewards revenues in the soon-to-be-reported quarter.

Corporate Risk & Broking segment’s revenues are likely to have benefited from new business and solid renewals. The Zacks Consensus Estimate for segment revenues is pegged at $668 million, implying a decrease of 3.2% from the year-ago reported figure.

Investment, Risk & Reinsurance segment’s revenues are likely to have been aided by new business and favorable renewals.

Increasing expenses may have dampened margin expansion.

The Zacks Consensus Estimate for earnings per share is pegged at $1.62, suggesting nearly 10% decrease from the year-ago reported figure.

Willis Towers Watson Public Limited Company Price and EPS Surprise

Willis Towers Watson Public Limited Company price-eps-surprise | Willis Towers Watson Public Limited Company Quote

What the Zacks Model Says

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 an earnings beat. That is not the case as you can see below.

Earnings ESP: Willis Towers has an Earnings ESP of -1.96%. This is because the Most Accurate Estimate of $1.59 is pegged lower than the Zacks Consensus Estimate of $1.62. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Willis Towers currently carries a Zacks Rank of 3.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

American Financial Group AFG has an Earnings ESP of +21.45% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marsh McLennan Companies MMC has an Earnings ESP of +3.95% and a Zacks Rank #3.

Allstate Corporation ALL has an Earnings ESP of +11.10% and a Zacks Rank of 3.

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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.