Willis Towers Watson Public Limited CompanyWLTW is slated to report fourth-quarter 2016 results on Feb 9, before the market opens. Last quarter, the company had posted a positive earnings surprise of 0.97%. Let's see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Willis Towers is likely to report adjusted revenue growth in the fourth quarter, driven by solid customer retention levels and new business growth.
Moreover, the company has likely witnessed improvement in commissions and fees, which forms a major component of the insurance broker's revenues.
Also, continued share buy back should aid the bottom line.
However, the company is likely to display a rise in operating expenses this time around. Higher costs might result in operating margin contraction in the to-be-reported quarter.
In addition, the company's restructuring costs are likely to have gone up in the fourth quarter owing to the implementation of the Operational Improvement Program.
Management expects costs savings from Operational Improvement Program to be about $150 million in 2016. Restructuring costs are expected to be about $165 million.
The company also estimates costs savings from the merger to be about $150 million in 2016, while merger and integration-related costs are expected to be about $150-175 million. Interest expenses for 2016 are estimated to be $200 million in 2016.
With respect to the surprise trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 1.12%.
Willis Towers Watson Public Limited Company Price and EPS Surprise
Our proven model does not conclusively show that Willis Towers is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP : Willis Towers has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.61. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .
Zacks Rank : Willis Towers carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Argo Group International Holdings, Ltd. AGII , which will report fourth-quarter earnings on Feb 13, has an Earnings ESP of +9.52% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .
American International Group, Inc. AIG has an Earnings ESP of +2.46% and a Zacks Rank #3. The company will report fourth-quarter earnings on Feb 14.
CubeSmart CUBE has an Earnings ESP of +2.70% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings on Feb 16.
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