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Can Willis Towers (WLTW) Deliver A Beat in Q2 Earnings?

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Willis Towers Watson Public Limited Company is slated to report second-quarter 2018 results on Aug 2, before the market opens. Last reported quarter, the company beat the Zacks Consensus Estimate by 3.04%.

Let’s see, how things are shaping up for this announcement.

Willis Towers is expected to have witnessed another quarter of growth in commissions and fees on the strength of its improved segmental performances, an expanded footprint and contributions from acquisitions.

In its Exchange business, Willis Towers continues to maintain a robust 2018 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 estimates another 45,000-55,000 retirees to enroll further.

Investment income is likely to have increased in the quarter attributable to an improving rate environment.

Share buybacks and a low tax rate have likely boosted the company’s bottom line.

However, hedging costs and adverse forex could limit this upside.

The Zacks Consensus Estimate for second-quarter earnings stands at $1.67 per share on revenues of $1.96 billion. These in turn, translate into a respective year-over-year increase of 15.2% and 0.5%.

Willis Towers Watson Public Limited Company Price and EPS Surprise

What the Quantitative Model Indicates

Our proven model shows that Willis Towers is likely to beat estimates this to-be-reported quarter. This is because it has the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for an earnings beat.

Earnings ESP: Willis Towers has an Earnings ESP of +0.53%. This is because the Most Accurate Estimate of $1.68 is pegged higher than the Zacks Consensus Estimate of $1.67. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Willis Towers carries a Zacks Rank #3, which increases the predictive power of ESP. Further with a positive ESP, the combination increases the odds of a likely earnings surprise for the stock.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with the right combination of elements to also exceed estimates this time around are as follows:

Prudential Financial, Inc. (PRU - Free Report) is set to report second-quarter earnings on Aug 1. The stock has an Earnings ESP of +0.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

XL Group Ltd. has an Earnings ESP of +6.37% and a Zacks Rank of 3. The company is scheduled to announce second-quarter earnings on Jul 31.

American Financial Group, Inc. (AFG - Free Report) has an Earnings ESP of +1.68% and is a Zacks #2 Ranked player. The company is expected to release second-quarter earnings on Aug 1.

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