Aon Plc (AON - Analyst Report) is set to report second-quarter 2014 earnings results on Jul 25, 2014. Last quarter, it posted a 9.40% surprise. Let’s see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
Aon has undertaken a number of initiatives to enhance operations, which should contribute positively to earnings in the quarter. These measures include launching programs with enhanced coverage options, introducing innovative use of surety bonds for pension schemes and the rollout of a Talent Insight and Analytics solution to enable clients to make better HR decisions.
Moreover, its restructuring plans should generate savings and check operating expenses, thereby making way for margin expansion. However, foreign currency fluctuations, heightened competition and the current legal hassles might dampen the results to some extent.
Our proven model does not conclusively show that Aon is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zero Zacks ESP: That is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.20 per share, making the difference 0.00%.
Zacks Rank #4 (Sell): Aon has a Zacks Rank #4. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
RenaissanceRe Holdings Ltd. (RNR - Analyst Report) has Earnings ESP of +1.71% and Zacks Rank #2 (Buy).
Arch Capital Group Ltd. (ACGL - Snapshot Report) has Earnings ESP of +5.10% and Zacks Rank #2.
Berkshire Hathaway Inc. has Earnings ESP of +6.62% and Zacks Rank #2.