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AON to Announce Q3 Earnings: What's in Store for the Stock?

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Aon plc (AON - Free Report) is slated to report third-quarter 2021 results on Oct 29, before the opening bell.

Q3 Estimates

The Zacks Consensus Estimate for Aon’s earnings is pegged at $1.67 per share, indicating a 9.2% rise from the prior-year quarter’s reported figure.

The consensus mark for revenues stands at $2.6 billion, suggesting an increase of 8.3% from the year-ago quarter’s reported figure.

Factors to Note

The company is likely to have witnessed organic revenue growth in the third quarter owing to improvement in its core areas.

Aon’s segments, namely Commercial Risk Solutions, Reinsurance Solutions, Data & Analytic Services and Health Solutions are likely to have contributed to its top line in the to-be-reported quarter.

Commercial Risk Solutions’ revenues are likely to have gained from new business generation, robust retention and management of the renewal book portfolio resulting in double-digit growth in the United States, Asia, EMEA and Latin America. The Zacks Consensus Estimate for the Commercial Risk Solutions segment’s revenues is pegged at $1.2 billion, suggesting a 19.9% increase from the prior-year quarter’s reported figure.

The Data & Analytics Services segment is expected to have shown  growth from the year-ago quarter's levels  as people’s spending on travel increased. The performance was cushioned by global growth in the affinity business in consumer and business solutions along with double-digit growth generated through the company’s CoverWallet digital platform. The consensus mark for this segment’s revenues stands at $291 million, indicating a 4.7% rise from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for the Health Solutions segment’s third-quarter revenues is pegged at $337 million, suggesting a 19.5%
improvement from the year-ago period’s reported figure. This upside can be attributed to growth in the more discretionary portions, led by an increase in project-related work as well as strength in voluntary benefits.

The Retirement Solutions is expected to have suffered to some extent in the to-be-reported quarter. The consensus mark for the Retirement Solutions is pegged at $461 million, indicating a 1.5% dip from the year-ago quarter’s reported figure.

The Reinsurance Solutions segment is likely to have witnessed growth in the to-be-reported quarter on the back of constant new business generation and double-digit growth in capital market transactions. The consensus estimate for the segment’s third-quarter revenues stands at $343 million, implying an improvement of 6.9% from the prior-year quarter’s reported number.

However, the bottom line is likely to have been partly offset by escalating expenses due to substantial investments in the priority areas for long-term growth and an increase in certain discretionary expenses.

The company is likely to have continued with its share repurchase program, which aided its bottomline.

Aon is likely to have witnessed higher free cash flow, driven by its strong operational improvement.

What Our Quantitative Model Predicts

Our proven model doesn’t 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 odds of an earnings beat, which is not the case here:

Earnings ESP: Aon has an Earnings ESP of -1.08%. This is because the Most Accurate Estimate is pegged at $1.65, lower 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.

Aon plc Price and EPS Surprise

Aon plc Price and EPS Surprise

Aon plc price-eps-surprise | Aon plc Quote

Zacks Rank: Aon currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings and Surprise History

Aon reported second-quarter 2021 operating earnings of $2.29 per share, which outpaced the Zacks Consensus Estimate by 27.2%. Moreover, the bottom line climbed 16.8% year over year.

Results benefited from higher revenues and solid contributions from its Reinsurance Solutions, Retirement Solutions, Data & Analytic Services, Health Solutions and Commercial Risk Solutions segments.

The company’s earnings beat estimates in all the trailing four quarters, the average being 10.03%.

Stocks to Consider

Some stocks worth considering from the insurance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Athene Holding Ltd. currently has a Zacks Rank #2 and an Earnings ESP of +1.71%.

MetLife, Inc. (MET - Free Report) is currently Zacks #3 Ranked and has an Earnings ESP of +1.20%.

Manulife Financial Corp (MFC - Free Report) has an Earnings ESP of +1.53% and is presently a #3 Ranked player.
 


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