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AON to Report Q3 Earnings: Here's What You Should Expect

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Aon plc (AON - Free Report) is set to report third-quarter 2022 results on Oct 28, before the opening bell.

In the last reported quarter, the leading risk management service provider reported adjusted earnings per share of $2.63, beating the Zacks Consensus Estimate of $2.57, due to solid contributions from Reinsurance Solutions and Health Solutions. Growth in core P&C and an improvement in project-related work in Commercial Risk Solutions also benefited the results. However, the positives were partially offset by frail performance in Wealth Solutions and increased expenses.

Let’s see how things have shaped up prior to the third-quarter earnings announcement.

The Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings per share of $2.01 has witnessed no movement in the past week. The estimated figure suggests an increase of 15.5% from the prior-year reported number. Our earnings estimate is pegged at $2.02 per share for the third quarter.

Aon beat the consensus estimate in three of the prior four quarters and missed once, with the average surprise being 3.8%. This is depicted in the graph below:

Aon plc Price and EPS Surprise

Aon plc Price and EPS Surprise

Aon plc price-eps-surprise | Aon plc Quote

Both the Zacks Consensus Estimate and our estimate for third-quarter revenues are pegged at $2.8 billion, indicating a 3.6% increase from the year-ago reported figure.

Factors to Note

Commercial Risk Solutions’ performance is 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 line’s revenues is pegged at $1,584 million, suggesting an increase from the prior-year reported figure of $1,505 million. Our estimate for the metric is pegged at $1,581 million for the third quarter.

The Zacks Consensus Estimate for the Health Solutions line’s third-quarter revenues is pegged at $518 million, suggesting an improvement from the year-ago period’s $497 million. Our estimate is pegged at $511.9 million. This potential upside might have stemmed from growth in the more discretionary portions of the business, led by an increase in project-related work and strength in voluntary benefits.

The consensus mark for Reinsurance Solutions’ revenues is pegged at $372 million, indicating an increase from $353 million a year ago. Our estimate for the third quarter is pegged at $363.6 million. It is likely to have witnessed growth in the to-be-reported quarter on the back of consistent new business generation and growth in capital market transactions. All these factors are likely to have positioned the company for year-over-year growth.

However, the consensus mark for organic revenue growth in AON’s Health Solutions business indicates a 57.3% year-over-year decline. The Zacks Consensus Estimate for consolidated organic revenue growth indicates a 48% year-over-year decline, which is concerning.

Also, 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 growth, 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 -1.68%. The Most Accurate Estimate is currently pegged at $1.98 per share, lower than the Zacks Consensus Estimate of $2.01.

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 #4 (Sell).

Stocks to Consider

While an earnings beat looks uncertain for AON, here are some companies from the broader 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:

Axos Financial, Inc. (AX - Free Report) has an Earnings ESP of +4.06% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Axos Financial’s bottom line for the to-be-reported quarter is pegged at $1.13 per share, implying a 9.7% improvement from the year-ago figure. AX beat earnings estimates in each of the past four quarters, with an average surprise of 10.1%.

Atlas Corp. (ATCO - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank of 1.

The Zacks Consensus Estimate for Atlas’ bottom line for the to-be-reported quarter is pegged at 40 cents per share, which witnessed one upward estimate revision and no downward movements in the past 30 days. The consensus estimate for revenues is pegged at $436.8 million.

Trean Insurance Group, Inc. (TIG - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Trean Insurance’s bottom line for the to-be-reported quarter is pegged at 9 cents per share, which remained stable over the past week. The consensus mark for TIG’s revenues is pegged at $68.4 million, indicating 20.1% year-over-year growth.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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