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Will Aon plc (AON) Disappoint Investors in Q3 Earnings?
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Aon plc (AON - Free Report) is set to report third-quarter 2016 results on Oct 28, before the market opens. Last quarter, the company posted a negative earnings surprise of 71%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Aon has been driving a set of initiatives and making strategic investments that are likely to have strengthened the underlying performance of its risk-solution segment for the to-be-reported quarter.
Aon’s proactive client partnership might have continued to drive retention rates and boost new business generation in the third quarter.
The launch of Aon Client Treaty should have bolstered its broking initiatives that started bearing fruit in the third quarter, with the largest ever underwritten portfolio of risk.
The acquisition of Univers is expected to substantially contribute to Aon’s top line in the third quarter.
Exploring new business opportunities for growth combined with industry-leading data and analytics is likely have well positioned Aon’s reinsurance business in the third quarter.
Aon Hewitt's leadership backed by its in-depth understanding of the market might have facilitated the company to maintain its leadership.
Continuous investments in improvising health solutions, covering the full range of benefit strategies, client size, funding choices and Aon’s private health care exchangesmight have helped it to grow steadily in the to-be-reported quarter.
Aon is likely to display solid organic growth across all major business segments due to its industry-leading platform of client-serving capabilities. The recent alliance with Starbucks has likely strengthened its consumer-driven approach to health benefits
Aon’s vast investments in InPoint, a dedicated platform for providing data, analytics, engagement and consultation to insurers and reinsurers, are expected to have strengthened its client base and contributed to a better top line in the third quarter.
Aon’s target of returning capital to shareholders through share repurchase in the second half of the year might have boosted its margin by limiting the share count.
However, a persistently low interest rate along with Brexit-induced uncertainty might have limited the growth in net investment income.
The expected seasonal weakness of the third quarter is likely to have led to a normal quarterly pattern with modest operating income growth.
Despite its continuous efforts to reduce certain expenses that supported its non-core businesses, Aon might have suffered from the monetization of those.
Also, given its higher debt burden, the company does not expect its interest expense to be favorable in the third quarter.
Our proven model does not conclusively show that Aon is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Aon has an Earnings ESP of -0.78%. This is because the Most Accurate estimate stands at $1.27 where as the Zacks Consensus Estimate is pegged higher at $1.28. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Aon carries a Zacks Rank #3 (Hold). Though the company has a favorable Zacks Rank, its negative ESP complicates the surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies from the insurance space that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #3. The company is set to report third-quarter earnings also on Nov 1.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 3.
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Will Aon plc (AON) Disappoint Investors in Q3 Earnings?
Aon plc (AON - Free Report) is set to report third-quarter 2016 results on Oct 28, before the market opens. Last quarter, the company posted a negative earnings surprise of 71%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Aon has been driving a set of initiatives and making strategic investments that are likely to have strengthened the underlying performance of its risk-solution segment for the to-be-reported quarter.
Aon’s proactive client partnership might have continued to drive retention rates and boost new business generation in the third quarter.
The launch of Aon Client Treaty should have bolstered its broking initiatives that started bearing fruit in the third quarter, with the largest ever underwritten portfolio of risk.
The acquisition of Univers is expected to substantially contribute to Aon’s top line in the third quarter.
Exploring new business opportunities for growth combined with industry-leading data and analytics is likely have well positioned Aon’s reinsurance business in the third quarter.
Aon Hewitt's leadership backed by its in-depth understanding of the market might have facilitated the company to maintain its leadership.
Continuous investments in improvising health solutions, covering the full range of benefit strategies, client size, funding choices and Aon’s private health care exchangesmight have helped it to grow steadily in the to-be-reported quarter.
Aon is likely to display solid organic growth across all major business segments due to its industry-leading platform of client-serving capabilities. The recent alliance with Starbucks has likely strengthened its consumer-driven approach to health benefits
Aon’s vast investments in InPoint, a dedicated platform for providing data, analytics, engagement and consultation to insurers and reinsurers, are expected to have strengthened its client base and contributed to a better top line in the third quarter.
Aon’s target of returning capital to shareholders through share repurchase in the second half of the year might have boosted its margin by limiting the share count.
However, a persistently low interest rate along with Brexit-induced uncertainty might have limited the growth in net investment income.
The expected seasonal weakness of the third quarter is likely to have led to a normal quarterly pattern with modest operating income growth.
Despite its continuous efforts to reduce certain expenses that supported its non-core businesses, Aon might have suffered from the monetization of those.
Also, given its higher debt burden, the company does not expect its interest expense to be favorable in the third quarter.
AON PLC Price and EPS Surprise
AON PLC Price and EPS Surprise | AON PLC Quote
Earnings Whispers
Our proven model does not conclusively show that Aon is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Aon has an Earnings ESP of -0.78%. This is because the Most Accurate estimate stands at $1.27 where as the Zacks Consensus Estimate is pegged higher at $1.28. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Aon carries a Zacks Rank #3 (Hold). Though the company has a favorable Zacks Rank, its negative ESP complicates the surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies from the insurance space that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
American Financial Group Inc (AFG - Free Report) , which is slated to report third-quarter earnings on Nov 1, has an Earnings ESP of +2.61% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #3. The company is set to report third-quarter earnings also on Nov 1.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>