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Why Should You Stay Invested in Willis Towers (WTW) Stock
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Willis Towers Watson plc (WTW - Free Report) is well-poised for growth on increasing organic commissions and fees, solid retention levels, new business, strategic buyouts, solid capital position and favorable growth estimates. These factors cumulatively make Willis Towers stock worth retaining in one’s portfolio.
Willis Towers has a solid track record of beating earnings estimates in the last 12 quarters.
Zacks Rank & Price Performance
Willis Towers currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 14.8% compared with the industry’s decline of 9.8%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for Willis Towers’ 2022 earnings is pegged at $13.53, indicating an increase of 16.6% from the year-ago reported figure. The consensus mark for 2023 earnings stands at $15.55, suggesting growth of 14.7% year over year.
The expected long-term earnings growth is estimated to be 15.6%, better than the industry average of 11.3%.
By 2024, Willis Towers aims to achieve more than $10 billion in revenues by delivering growth in the mid-single-digit range, with reinvestment in differentiated solutions and scalable innovation and increasing market share. It targets an adjusted operating margin between 24% and 25% and adjusted earnings per share between $18 and $21. Free cash flow is estimated to be between $5 billion and $6 billion over the same time frame.
Business Tailwinds
A solid customer retention level and growing new business should fuel top-line growth. For 2022, WTW expects to deliver mid-single-digit organic revenue growth.
Willis Towers’ growth strategy revolves around focusing on core opportunities with the highest growth and returns, which include gaining market share in Risk and Broking and Individual Marketplace. The broker innovated and developed its offerings in markets and boosted its abilities in fast-growth markets like health insurance, cyber and climate.
WTW also eyes strategic inorganic expansion that expands its geographical footprint, adds capabilities and strengthens its portfolio.
Willis Towers remains focused on improving liquidity while maintaining a solid balance sheet.
Through its concerted efforts to manage expenses, Willis Towers estimates $300 million in cost reductions to contribute 300 basis points of improvement to the fiscal 2024 margin target by maximizing global platforms, right-shoring operations, rationalizing real estate and modernizing IT.
The insurance broker plans a $750 million investment over a three-year period through 2024.
Given operational excellence supporting a solid financial standing, Willis Towers has raised its dividend at a nine-year CAGR (2014-2022) of 11.8% and had $2.3 billion under its authorization in May 2022. Willis Towers estimates to deploy $10-$11 billion in capital through 2024 to drive shareholder value with new investment and aims for industry-leading total shareholder returns.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 16%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in three of the last four quarters and matched in one, the average earnings surprise being 270.8%. In the past year, UFCS stock has gained 40.9%.
The Zacks Consensus Estimate for United Fire’s 2022 earnings has moved 23.5% north, in the past 60 days.
Chubb’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 13.4%. In the past year, CB stock has gained 22.7%.
The Zacks Consensus Estimate for Chubb’s 2022 and 2023 earnings per share indicates a year-over-year increase of 18.9% and 10.7%, respectively.
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Why Should You Stay Invested in Willis Towers (WTW) Stock
Willis Towers Watson plc (WTW - Free Report) is well-poised for growth on increasing organic commissions and fees, solid retention levels, new business, strategic buyouts, solid capital position and favorable growth estimates. These factors cumulatively make Willis Towers stock worth retaining in one’s portfolio.
Willis Towers has a solid track record of beating earnings estimates in the last 12 quarters.
Zacks Rank & Price Performance
Willis Towers currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 14.8% compared with the industry’s decline of 9.8%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for Willis Towers’ 2022 earnings is pegged at $13.53, indicating an increase of 16.6% from the year-ago reported figure. The consensus mark for 2023 earnings stands at $15.55, suggesting growth of 14.7% year over year.
The expected long-term earnings growth is estimated to be 15.6%, better than the industry average of 11.3%.
By 2024, Willis Towers aims to achieve more than $10 billion in revenues by delivering growth in the mid-single-digit range, with reinvestment in differentiated solutions and scalable innovation and increasing market share. It targets an adjusted operating margin between 24% and 25% and adjusted earnings per share between $18 and $21. Free cash flow is estimated to be between $5 billion and $6 billion over the same time frame.
Business Tailwinds
A solid customer retention level and growing new business should fuel top-line growth. For 2022, WTW expects to deliver mid-single-digit organic revenue growth.
Willis Towers’ growth strategy revolves around focusing on core opportunities with the highest growth and returns, which include gaining market share in Risk and Broking and Individual Marketplace. The broker innovated and developed its offerings in markets and boosted its abilities in fast-growth markets like health insurance, cyber and climate.
WTW also eyes strategic inorganic expansion that expands its geographical footprint, adds capabilities and strengthens its portfolio.
Willis Towers remains focused on improving liquidity while maintaining a solid balance sheet.
Through its concerted efforts to manage expenses, Willis Towers estimates $300 million in cost reductions to contribute 300 basis points of improvement to the fiscal 2024 margin target by maximizing global platforms, right-shoring operations, rationalizing real estate and modernizing IT.
The insurance broker plans a $750 million investment over a three-year period through 2024.
Given operational excellence supporting a solid financial standing, Willis Towers has raised its dividend at a nine-year CAGR (2014-2022) of 11.8% and had $2.3 billion under its authorization in May 2022. Willis Towers estimates to deploy $10-$11 billion in capital through 2024 to drive shareholder value with new investment and aims for industry-leading total shareholder returns.
Stocks to Consider
Some better ranked stocks from the property and casualty insurance industry are American Financial Group, Inc. (AFG - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Chubb Limited (CB - Free Report) . While American Financial Group sport a Zacks Rank #1 (Strong Buy), United Fire and Chubb carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 16%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in three of the last four quarters and matched in one, the average earnings surprise being 270.8%. In the past year, UFCS stock has gained 40.9%.
The Zacks Consensus Estimate for United Fire’s 2022 earnings has moved 23.5% north, in the past 60 days.
Chubb’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 13.4%. In the past year, CB stock has gained 22.7%.
The Zacks Consensus Estimate for Chubb’s 2022 and 2023 earnings per share indicates a year-over-year increase of 18.9% and 10.7%, respectively.