We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Aon's (AON) Q4 Earnings Beat Estimates, Revenues Up Y/Y
Read MoreHide Full Article
Aon plc (AON - Free Report) reported fourth-quarter 2020 operating earnings of $2.62 per share, which outpaced the Zacks Consensus Estimate by 5.7%. Moreover, the bottom line climbed 4% year over year.
The company’s results benefited from higher revenues and lower operating costs.
Further, total revenues improved 3% year over year at $3 billion, which comprised organic revenue growth of 2%. The upside can primarily be attributed to improved performances at Reinsurance Solutions, Health Solutions and Commercial Risk Solutions. Meanwhile, the top line outpaced the consensus mark by 4.7%.
Operating margin expanded 580 basis points (bps) to 24%, while operating margin, adjusted for certain items, contracted 100 bps to 26.9%.
Total operating expenses in the fourth quarter declined 5% year over year to $2.3 billion attributable to reduced information technology costs, expenses related to premises, and general expenses plus depreciation of fixed assets.
Commercial Risk Solutions: Organic revenues improved 4% year over year on the back of robust retention and management of the renewal book portfolio resulting in double-digit growth in Latin America and solid growth across the United States. Results also reflect robust growth in core P&C, improved transaction liability and construction in the United States. Notably, the segment reported a year-over-year rise of 3% in total revenues to $1.4 billion.
Reinsurance Solutions: Organic revenues improved 12% year over year, courtesy of double-digit growth across treaty stemming from higher facultative payments and persistent net new business generation on a worldwide basis. Moreover, total revenues for the segment improved 5% year over year to $197 million.
Retirement Solutions: Organic revenues dipped 2% year over year. The results were impacted by a decent fall in the more discretionary parts of Retirement and Investments, and reduced Human Capital for rewards services. Further, total revenues at the segment remained flat year over year.
Health Solutions: Organic revenues grew 2% year over year. The upside came on the back of core business growth courtesy of a growing healthcare exchange business, and solid retention and management of the renewal book portfolio in health and benefits brokerage. Further, revenues from this segment advanced 5% year over year to $613 million.
Data & Analytic Services: Organic revenues fell 8% year over year due to reduction in travel and events practice globally. Revenues decreased 1% year over year to $288 million.
Financial Position
The company exited the fourth quarter with cash and cash equivalents of $884 million, which improved 11.9% from the level at 2019 end. As of Dec 31, 2020, Aon had total assets worth $32.1 billion, up 9.2% from the level on Dec 31, 2019.
As of Dec 31, 2020, long-term debt stands at $7.3 billion, which increased 9.9% from the level at 2019 end.
Share Repurchase Update
The company bought back 3.9 million Class A Ordinary shares for around $800 million in the quarter under review. In November 2020, its board of directors authorized a new share buyback program worth $5 billion. As of Dec 31, 2020, the company had around $5.3 billion left under its share repurchase program.
Full-Year Update
For 2020, the company’s adjusted EPS jumped 7% to $9.81 from the prior year. Also, total revenues remained flat at $11.1 billion including 1% organic revenue growth.
During 2020, the company’s cash flow from operations surged 52% from the level in 2019 to $2.8 billion.
Moreover, the company’s free cash flow of $2.6 billion surged 64% last year from the figure in 2019, which was the highest in the company’s history according to management. This upside can be attributed to higher cash flow from operations and lower capital expenditures. During 2020, the company bought back 8.5 million Class A Ordinary Shares for around $1.8 billion.
Among other brokers, which reported fourth-quarter earnings so far, the bottom-line results of Marsh & McLennan Companies, Inc. (MMC - Free Report) , Arthur J. Gallagher & Co. (AJG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat the respective Zacks Consensus Estimate.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Image: Bigstock
Aon's (AON) Q4 Earnings Beat Estimates, Revenues Up Y/Y
Aon plc (AON - Free Report) reported fourth-quarter 2020 operating earnings of $2.62 per share, which outpaced the Zacks Consensus Estimate by 5.7%. Moreover, the bottom line climbed 4% year over year.
The company’s results benefited from higher revenues and lower operating costs.
Further, total revenues improved 3% year over year at $3 billion, which comprised organic revenue growth of 2%. The upside can primarily be attributed to improved performances at Reinsurance Solutions, Health Solutions and Commercial Risk Solutions. Meanwhile, the top line outpaced the consensus mark by 4.7%.
Operating margin expanded 580 basis points (bps) to 24%, while operating margin, adjusted for certain items, contracted 100 bps to 26.9%.
Total operating expenses in the fourth quarter declined 5% year over year to $2.3 billion attributable to reduced information technology costs, expenses related to premises, and general expenses plus depreciation of fixed assets.
Aon plc Price, Consensus and EPS Surprise
Aon plc price-consensus-eps-surprise-chart | Aon plc Quote
Organic Revenue Catalysts
Commercial Risk Solutions: Organic revenues improved 4% year over year on the back of robust retention and management of the renewal book portfolio resulting in double-digit growth in Latin America and solid growth across the United States. Results also reflect robust growth in core P&C, improved transaction liability and construction in the United States. Notably, the segment reported a year-over-year rise of 3% in total revenues to $1.4 billion.
Reinsurance Solutions: Organic revenues improved 12% year over year, courtesy of double-digit growth across treaty stemming from higher facultative payments and persistent net new business generation on a worldwide basis. Moreover, total revenues for the segment improved 5% year over year to $197 million.
Retirement Solutions: Organic revenues dipped 2% year over year. The results were impacted by a decent fall in the more discretionary parts of Retirement and Investments, and reduced Human Capital for rewards services. Further, total revenues at the segment remained flat year over year.
Health Solutions: Organic revenues grew 2% year over year. The upside came on the back of core business growth courtesy of a growing healthcare exchange business, and solid retention and management of the renewal book portfolio in health and benefits brokerage. Further, revenues from this segment advanced 5% year over year to $613 million.
Data & Analytic Services: Organic revenues fell 8% year over year due to reduction in travel and events practice globally. Revenues decreased 1% year over year to $288 million.
Financial Position
The company exited the fourth quarter with cash and cash equivalents of $884 million, which improved 11.9% from the level at 2019 end. As of Dec 31, 2020, Aon had total assets worth $32.1 billion, up 9.2% from the level on Dec 31, 2019.
As of Dec 31, 2020, long-term debt stands at $7.3 billion, which increased 9.9% from the level at 2019 end.
Share Repurchase Update
The company bought back 3.9 million Class A Ordinary shares for around $800 million in the quarter under review. In November 2020, its board of directors authorized a new share buyback program worth $5 billion. As of Dec 31, 2020, the company had around $5.3 billion left under its share repurchase program.
Full-Year Update
For 2020, the company’s adjusted EPS jumped 7% to $9.81 from the prior year. Also, total revenues remained flat at $11.1 billion including 1% organic revenue growth.
During 2020, the company’s cash flow from operations surged 52% from the level in 2019 to $2.8 billion.
Moreover, the company’s free cash flow of $2.6 billion surged 64% last year from the figure in 2019, which was the highest in the company’s history according to management. This upside can be attributed to higher cash flow from operations and lower capital expenditures. During 2020, the company bought back 8.5 million Class A Ordinary Shares for around $1.8 billion.
Zacks Rank
Aon 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 Brokers
Among other brokers, which reported fourth-quarter earnings so far, the bottom-line results of Marsh & McLennan Companies, Inc. (MMC - Free Report) , Arthur J. Gallagher & Co. (AJG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat the respective Zacks Consensus Estimate.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>