Willis Towers Watson Public Limited Company delivered fourth-quarter 2018 adjusted earnings of $4.00 per share, missing the Zacks Consensus Estimate of $4.06. The bottom line surged 81% year over year.
The quarter witnessed strong top-line growth, margin expansion and sturdy cash flow.
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.4 billion, up 14.1% year over year, on a reported basis. The metric grew 5% on organic basis. The top line missed the Zacks Consensus Estimate by 0.2%.
Total cost of providing services decreased 4.8% year over year to $1.9 billion.
Adjusted EBITDA was $774 million. Adjusted EBITDA margin was 32.6%.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Full year Highlights
Operating income was $9.73 per share on revenues of $8.5 billion.
Revenues increased 4% on a reported basis. Organic growth was 5%.
Adjusted EBITDA was $2 billion and adjusted EBITDA margin was 23.9%.
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $843 million were up 10% year over year. Operating margin was 30%.
Corporate Risk & Broking: Total revenues of $816 million improved 3% year over year. Operating margin was 29% in the quarter under review.
Investment, Risk & Reinsurance: Total revenues of $280 million declined 3% from the prior-year quarter. Operating margin was 2%.
Benefits Delivery & Administration: Total revenues of $390 million surged 101% year over year. Operating margin was 61%.
Financial Update
Cash and cash equivalents increased 0.3% from the 2017-end level to about $1 billion.
Long-term debt increased 1.4% from 2017 end to nearly $4.4 billion at 2018-end.
Shareholders’ equity dipped 2.7% from the level on Dec 31, 2017 to $909 billion as of Dec 31, 2018.
For 2018, cash from operations improved 49% year over year to $1.3 billion. For 2018, free cash flow was $1 billion, up 81% year over year.
The company bought back shares worth $602 million in 2018.
2019 Guidance
Willis Towers estimates about 4% organic revenue growth. Adjusted operating margin should hover around 20%.
Adjusted earnings are projected in the range of $10.60-$10.85 per share, whose mid-point of $10.73 is below the current Zacks Consensus Estimate of $10.98 for 2019. Forex is estimated to drag down the bottom line by 10 cents.
Free cash flow is expected to grow at least 15%.
Zacks Rank
Willis Towers currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other insurance brokers that have reported fourth-quarter earnings so far, Aon Plc (AON - Free Report) and Arthur J. Gallagher & Co. (AJG - Free Report) beat the respective Zacks Consensus Estimate while Brown & Brown, Inc. (BRO - Free Report) missed the same.
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Willis Towers Watson Public Limited Company delivered fourth-quarter 2018 adjusted earnings of $4.00 per share, missing the Zacks Consensus Estimate of $4.06. The bottom line surged 81% year over year.
The quarter witnessed strong top-line growth, margin expansion and sturdy cash flow.
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.4 billion, up 14.1% year over year, on a reported basis. The metric grew 5% on organic basis. The top line missed the Zacks Consensus Estimate by 0.2%.
Total cost of providing services decreased 4.8% year over year to $1.9 billion.
Adjusted EBITDA was $774 million. Adjusted EBITDA margin was 32.6%.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Full year Highlights
Operating income was $9.73 per share on revenues of $8.5 billion.
Revenues increased 4% on a reported basis. Organic growth was 5%.
Adjusted EBITDA was $2 billion and adjusted EBITDA margin was 23.9%.
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $843 million were up 10% year over year. Operating margin was 30%.
Corporate Risk & Broking: Total revenues of $816 million improved 3% year over year. Operating margin was 29% in the quarter under review.
Investment, Risk & Reinsurance: Total revenues of $280 million declined 3% from the prior-year quarter. Operating margin was 2%.
Benefits Delivery & Administration: Total revenues of $390 million surged 101% year over year. Operating margin was 61%.
Financial Update
Cash and cash equivalents increased 0.3% from the 2017-end level to about $1 billion.
Long-term debt increased 1.4% from 2017 end to nearly $4.4 billion at 2018-end.
Shareholders’ equity dipped 2.7% from the level on Dec 31, 2017 to $909 billion as of Dec 31, 2018.
For 2018, cash from operations improved 49% year over year to $1.3 billion. For 2018, free cash flow was $1 billion, up 81% year over year.
The company bought back shares worth $602 million in 2018.
2019 Guidance
Willis Towers estimates about 4% organic revenue growth. Adjusted operating margin should hover around 20%.
Adjusted earnings are projected in the range of $10.60-$10.85 per share, whose mid-point of $10.73 is below the current Zacks Consensus Estimate of $10.98 for 2019. Forex is estimated to drag down the bottom line by 10 cents.
Free cash flow is expected to grow at least 15%.
Zacks Rank
Willis Towers currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other insurance brokers that have reported fourth-quarter earnings so far, Aon Plc (AON - Free Report) and Arthur J. Gallagher & Co. (AJG - Free Report) beat the respective Zacks Consensus Estimate while Brown & Brown, Inc. (BRO - Free Report) missed the same.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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