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AON to Announce Q4 Earnings: What's in Store for the Stock?
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Aon plc (AON - Free Report) is set to report fourth-quarter 2021 results on Feb 4, before the opening bell.
In the last reported quarter, the leading risk management service provider reported earnings per share of $1.74, beating the Zacks Consensus Estimate of $1.67 backed by new business generation, robust retention, and growth in Human Capital, delegated investment management and others.
Aon beat the consensus estimate in each of the prior four quarters, with the average being 10.8%. This is depicted in the graph below:
The Zacks Consensus Estimate for fourth-quarter earnings per share of $3.40 has witnessed two upward and no downward movement in the past 30 days. The estimated figure suggests an increase of 29.8% from the prior-year reported number.
The consensus estimate for fourth-quarter revenues of $3.2 billion indicates an 8% increase from the year-ago reported figure.
Factors to Note
Aon is likely to have witnessed significant organic revenue growth in the fourth quarter owing to an improvement in core areas. The company is likely to have witnessed higher free cash flow, driven by strong operational improvement.
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 segment’s revenues is pegged at $1,830 million, suggesting an increase from the prior-year reported figure of $1,376 million.
The Zacks Consensus Estimate for the Health Solutions segment’s fourth-quarter revenues is pegged at $670 million, suggesting an improvement from the year-ago period’s $613 million. This upside might have stemmed from growth in the more discretionary portions, led by an increase in project-related work and strength in voluntary benefits.
Also, the consensus mark for Reinsurance Solutions’ revenues is pegged at $212 million, indicating an increase from $197 million a year ago. It is likely to have witnessed growth in the to-be-reported quarter on the back of constant new business generation and growth in capital market transactions. All these factors are likely to have positioned the company for year-over-year growth.
Yet, 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 improvement, 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 -2.11%. This is because the Most Accurate Estimate is currently pegged at $3.33 per share, lower than the Zacks Consensus Estimate of $3.40. 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.
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:
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Arch Capital’s bottom line for the to-be-reported quarter indicates an 82.1% year-over-year rise.
Jones Lang LaSalle Incorporated (JLL - Free Report) has an Earnings ESP of +9.23% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jones Lang LaSalle’s earnings per share for the to-be-reported quarter signals a 26.3% year-over-year jump.
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.88% and a Zacks Rank #3.
The Zacks Consensus Estimate for American International’s bottom line for the to-be-reported quarter indicates a 24.5% year-over-year increase.
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AON to Announce Q4 Earnings: What's in Store for the Stock?
Aon plc (AON - Free Report) is set to report fourth-quarter 2021 results on Feb 4, before the opening bell.
In the last reported quarter, the leading risk management service provider reported earnings per share of $1.74, beating the Zacks Consensus Estimate of $1.67 backed by new business generation, robust retention, and growth in Human Capital, delegated investment management and others.
Aon beat the consensus estimate in each of the prior four quarters, with the average being 10.8%. This is depicted in the graph below:
Aon plc Price and EPS Surprise
Aon plc price-eps-surprise | Aon plc Quote
Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter earnings per share of $3.40 has witnessed two upward and no downward movement in the past 30 days. The estimated figure suggests an increase of 29.8% from the prior-year reported number.
The consensus estimate for fourth-quarter revenues of $3.2 billion indicates an 8% increase from the year-ago reported figure.
Factors to Note
Aon is likely to have witnessed significant organic revenue growth in the fourth quarter owing to an improvement in core areas. The company is likely to have witnessed higher free cash flow, driven by strong operational improvement.
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 segment’s revenues is pegged at $1,830 million, suggesting an increase from the prior-year reported figure of $1,376 million.
The Zacks Consensus Estimate for the Health Solutions segment’s fourth-quarter revenues is pegged at $670 million, suggesting an improvement from the year-ago period’s $613 million. This upside might have stemmed from growth in the more discretionary portions, led by an increase in project-related work and strength in voluntary benefits.
Also, the consensus mark for Reinsurance Solutions’ revenues is pegged at $212 million, indicating an increase from $197 million a year ago. It is likely to have witnessed growth in the to-be-reported quarter on the back of constant new business generation and growth in capital market transactions. All these factors are likely to have positioned the company for year-over-year growth.
Yet, 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 improvement, 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 -2.11%. This is because the Most Accurate Estimate is currently pegged at $3.33 per share, lower than the Zacks Consensus Estimate of $3.40. 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.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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:
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Arch Capital’s bottom line for the to-be-reported quarter indicates an 82.1% year-over-year rise.
Jones Lang LaSalle Incorporated (JLL - Free Report) has an Earnings ESP of +9.23% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jones Lang LaSalle’s earnings per share for the to-be-reported quarter signals a 26.3% year-over-year jump.
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.88% and a Zacks Rank #3.
The Zacks Consensus Estimate for American International’s bottom line for the to-be-reported quarter indicates a 24.5% year-over-year increase.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.