Aon plc (AON - Free Report) is set to report second-quarter 2017 results on Aug 4, before the market opens. Last quarter, the company delivered a positive earnings surprise of 13.28%. It surpassed estimates in three of the last four quarters with an average positive surprise of 4.04%.
Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Aon’s strategic investments to strengthen underlying performance and numerous initiatives to maximize return on invested capital are expected to boost its Risk Solution segment.
On the back of proactive client partnerships Aon is likely to increase retention rates, in turn, boosting its revenues across the globe.
Technology moves as well as investment in data and analytics are expected to drive business in the second quarter.
Aon’s five revenue lines, namely, Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services are likely to perform well, adding to the company’s top line.
Aon’s share repurchase programs might boost its margin by limiting the outstanding share count.
However, the company is expected to suffer from unfavorable market conditions, especially pricing pressures in various countries across Europe and Asia.
The company’s second-quarter earnings are likely to be affected by rising operating expenses.
Heavy dependence on debt financing might push up interest expenses, impacting the margins adversely.
Aon PLC Price and EPS Surprise
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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stands at $1.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Aon’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
As it is 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 finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Cigna Corporation. (CI - Free Report) , which is expected to report second-quarter earnings on Aug 4, has an Earnings ESP of +1.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CyrusOne Inc (CONE - Free Report) has an Earnings ESP of +2.7% and a Zacks Rank #2. The company is set to report second-quarter earnings on Aug 2.
Invitation Home Inc. (INVH - Free Report) has an Earnings ESP of +4.17 % and a Zacks Rank #2. The company is set to report second-quarter earnings on Aug 10.
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