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AON to Announce Q2 Earnings: What's in Store for the Stock?
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Aon plc (AON - Free Report) is set to report second-quarter 2022 results on Jul 29, before the opening bell.
In the last reported quarter, the leading risk management service provider reported adjusted earnings per share of $4.83, missing the Zacks Consensus Estimate of $4.86, due to a frail performance in Health Solutions and Wealth Solutions. Higher expenses from compensation and benefits, and information technology also hindered growth. However, the negatives were partially offset by solid contributions from Reinsurance Solutions and Commercial Risk Solutions. Increased activities in catastrophe bonds and related insurance-linked securities aided Aon’s March-quarter results.
The Zacks Consensus Estimate for second-quarter earnings per share of $2.57 has witnessed no movement in the past week. The estimated figure suggests an increase of 12.2% from the prior-year reported number. The consensus estimate for second-quarter revenues of $3 billion indicates a 4.3% increase from the year-ago reported figure.
Aon beat the consensus estimate in three of the prior four quarters and missed once, with the average surprise being 10%. This is depicted in the graph below:
Commercial Risk Solutions’ revenues are likely to have gained from new business generation, robust retention, and management of the renewal book portfolio. Increased travel-related spending is expected to have aided the Data & Analytics Services business, which has become part of Commercial Risk Solutions. The Zacks Consensus Estimate for the Commercial Risk Solutions line’s revenues is pegged at $1,736 million, suggesting an increase from the prior-year reported figure of $1,349 million.
The Zacks Consensus Estimate for the Health Solutions line’s second-quarter revenues is pegged at $398 million, suggesting an improvement from the year-ago period’s $307 million. This potential upside might have stemmed from growth in the more discretionary portions of the business, led by an increase in project-related work and strength in voluntary benefits.
The consensus mark for Reinsurance Solutions’ revenues is pegged at $530 million, indicating an increase from $500 million a year ago. It is likely to have witnessed growth in the to-be-reported quarter on the back of consistent new business generation and growth in capital market transactions. All these factors are likely to have positioned the company for year-over-year growth.
However, the consensus mark for organic revenue growth in AON’s Health Solutions business indicates a 47% year-over-year decline. The Zacks Consensus Estimate for consolidated organic revenue growth indicates a 42.7% year-over-year decline, which is concerning. Also, escalating expenses due to substantial investments in the priority areas for long-term growth and an increase in certain discretionary expenses are likely to have affected bottom-line growth, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Aon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -1.36%. The Most Accurate Estimate is currently pegged at $2.54 per share, lower than the Zacks Consensus Estimate of $2.57.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AON currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for AON, here are some companies in the Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Assurant, Inc. (AIZ - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Assurant’s bottom line for the to-be-reported quarter is pegged at $3.21 per share, indicating a 7.4% year-over-year increase. AIZ beat earnings estimates in each of the trailing four quarters, delivering an average of 18.3%.
The Zacks Consensus Estimate for LPL Financial’s bottom line for the to-be-reported quarter is pegged at $2.01 per share, implying an 8.7% improvement from the year-ago figure. LPLA beat earnings estimates in each of the trailing four quarters, delivering an average of 7.7%.
Armada Hoffler Properties, Inc. (AHH - Free Report) has an Earnings ESP of +4.17% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Armada Hoffler’s bottom line for the to-be-reported quarter is pegged at 29 cents per share. AHH beat earnings estimates thrice in the trailing four quarters and met once, delivering an average surprise of 6%.
Image: Bigstock
AON to Announce Q2 Earnings: What's in Store for the Stock?
Aon plc (AON - Free Report) is set to report second-quarter 2022 results on Jul 29, before the opening bell.
In the last reported quarter, the leading risk management service provider reported adjusted earnings per share of $4.83, missing the Zacks Consensus Estimate of $4.86, due to a frail performance in Health Solutions and Wealth Solutions. Higher expenses from compensation and benefits, and information technology also hindered growth. However, the negatives were partially offset by solid contributions from Reinsurance Solutions and Commercial Risk Solutions. Increased activities in catastrophe bonds and related insurance-linked securities aided Aon’s March-quarter results.
Let’s see how things have shaped up prior to the second-quarter earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share of $2.57 has witnessed no movement in the past week. The estimated figure suggests an increase of 12.2% from the prior-year reported number. The consensus estimate for second-quarter revenues of $3 billion indicates a 4.3% increase from the year-ago reported figure.
Aon beat the consensus estimate in three of the prior four quarters and missed once, with the average surprise being 10%. This is depicted in the graph below:
Aon plc Price and EPS Surprise
Aon plc price-eps-surprise | Aon plc Quote
Factors to Note
Commercial Risk Solutions’ revenues are likely to have gained from new business generation, robust retention, and management of the renewal book portfolio. Increased travel-related spending is expected to have aided the Data & Analytics Services business, which has become part of Commercial Risk Solutions. The Zacks Consensus Estimate for the Commercial Risk Solutions line’s revenues is pegged at $1,736 million, suggesting an increase from the prior-year reported figure of $1,349 million.
The Zacks Consensus Estimate for the Health Solutions line’s second-quarter revenues is pegged at $398 million, suggesting an improvement from the year-ago period’s $307 million. This potential upside might have stemmed from growth in the more discretionary portions of the business, led by an increase in project-related work and strength in voluntary benefits.
The consensus mark for Reinsurance Solutions’ revenues is pegged at $530 million, indicating an increase from $500 million a year ago. It is likely to have witnessed growth in the to-be-reported quarter on the back of consistent new business generation and growth in capital market transactions. All these factors are likely to have positioned the company for year-over-year growth.
However, the consensus mark for organic revenue growth in AON’s Health Solutions business indicates a 47% year-over-year decline. The Zacks Consensus Estimate for consolidated organic revenue growth indicates a 42.7% year-over-year decline, which is concerning. Also, escalating expenses due to substantial investments in the priority areas for long-term growth and an increase in certain discretionary expenses are likely to have affected bottom-line growth, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Aon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -1.36%. The Most Accurate Estimate is currently pegged at $2.54 per share, lower than the Zacks Consensus Estimate of $2.57.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AON currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for AON, here are some companies in the Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Assurant, Inc. (AIZ - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Assurant’s bottom line for the to-be-reported quarter is pegged at $3.21 per share, indicating a 7.4% year-over-year increase. AIZ beat earnings estimates in each of the trailing four quarters, delivering an average of 18.3%.
LPL Financial Holdings Inc. (LPLA - Free Report) has an Earnings ESP of +0.13% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LPL Financial’s bottom line for the to-be-reported quarter is pegged at $2.01 per share, implying an 8.7% improvement from the year-ago figure. LPLA beat earnings estimates in each of the trailing four quarters, delivering an average of 7.7%.
Armada Hoffler Properties, Inc. (AHH - Free Report) has an Earnings ESP of +4.17% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Armada Hoffler’s bottom line for the to-be-reported quarter is pegged at 29 cents per share. AHH beat earnings estimates thrice in the trailing four quarters and met once, delivering an average surprise of 6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.